Lords Sitting of 30 May 1938

Preamble
The House met at a quarter past four of the clock, The LORD CHANCELLOR on the Woolsack.
The Lord Chancellor informed the House, that he had received from the Senior Registrar in Bankruptcy a certificate that Hardinge Goulburn, Earl of Halsbury, was on the 29th day of April, 1938, adjudicated a bankrupt.

ROAD HAULAGE WAGES (No. 2) BILL.
Brought from the Commons; read 1a; and to be printed.
WEST SURREY WATER BILL. [H.L.]
Returned from the Commons, agreed to, with an Amendment: The said Amendment considered and agreed to.

COAL BILL.
House again in Committee (according to Order):
[The EARL OF ONSLOW in the Chair.]
Third Schedule:

THIRD SCHEDULE.
PROVISIONS AS TO COMPENSATION PAYABLE UNDER SECTION SIX OF THIS ACT.
PART III

  VALUATION.
  Claims and Valuation Proceedings.
  II.—(1) …
  (4) When the Regional Valuation Board have settled a draft of their valuation of a holding they shall give notice thereof in the prescribed form to the claimant, and, if the valuation relates to subsidiary coal hereditaments within the meaning of Section six of this Act, to the Commission, and, if the claimant, or, in the case aforesaid, the Commission, so require in the prescribed manner and within the prescribed period, the Board shall give him or them an opportunity of being heard by a person experienced in the valuation of minerals or in the management of mineral estates, or in the case of a claimant, in person, and where in the case aforesaid a hearing is required either by the Commission or the claimant the Board shall give to the other of them also an opportunity of being heard as aforesaid. The said notice
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  to the claimant shall contain an intimation of his right to be so heard.
  12.—(1) …
  (6) In the case of a valuation that relates to subsidiary coal hereditaments within the meaning of Section six of this Act, the foregoing provisions of this paragraph shall have effect subject to the following modifications, that is to say—
  (a) …

PART IV.

  >PAYMENT AND DISPOSAL OF COMPENSATION.
  Payments on account.
  19.—(1) At any time before the vesting date, or after that date but before the relevant certificates have become conclusive under paragraph 17 of this Schedule, the Commission, if they are satisfied that the compensation for any holding, or the aggregate of the compensation for a number of holdings to which the same person is entitled, will be not less than a particular amount, may make payment of such sum not exceeding that amount as they may think fit on account of the compensation for the holding or holdings: Provided …
  (3) A payment on account made under this paragraph before the vesting date, together with interest thereon for the period between the date on which the payment is made and the vesting date at the rate of three pounds per cent. per annum less Income Tax at the standard rate, shall be treated in account as a payment on account of the capital of the compensation made on the vesting date, and the said interest shall be deemed for all purposes, including the purposes of the Income Tax Acts, to be paid on each anniversary of the date of the payment on account that occurs before the vesting date and on the vesting date.
  Disposal of compensation as between beneficial interests.
  20.—(1) Subject to the provisions of this paragraph the compensation paid in respect of a holding and the income thereof shall be held and disposed of for the benefit of the persons whose interests are comprised in the holding and their successors in title respectively, in such manner as to confer on them the like benefits, so far as may be, as they would have had from the premises in which the holding subsisted and the income thereof if they had not been acquired by the Commission.
  (2) In the case of a holding that could have been sold as mentioned in sub-paragraph (a) of paragraph eighteen of this Schedule under powers conferred by the Ecclesiastical Leasing Acts, the compensation paid in respect thereof and the income thereof shall be held and disposed of, and the said Acts shall have effect, in like manner as if the compensation had been money paid to the Ecclesiastical Commissioners upon a sale under the said Acts of the premises in which the holding subsisted:
  Provided that if the holding was a reversion and the rent reserved by the lease was subject,

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  by virtue of a scheme in force under the said Acts, to a direction for the payment thereof to the Ecclesiastical Commissioners for the benefit of their common fund, the direction shall have effect in relation to the income of the compensation as it had effect in relation to the rent.
  21. Where a payment on account under paragraph 19 of this Schedule is made on a date before the vesting date, then, as between the persons interested in the capital and income respectively of the compensation, the income accruing before the vesting date from the investment of the sum paid shall be set aside as capital.
  LORD MIDDLETON LORD MIDDLETON moved to insert the following new paragraph:
  11.—(1) In the case of any holding in respect of which an apportionment of rent is prescribed under Section ten of this Act the regional Valuation Board shall make the apportionment as soon as may be after notice of registration in relation to the holding has been given to them under the last preceding paragraph and shall give notice thereof in the prescribed form to the claimant, to any persons intervening, and to the lessee (which expression for the purposes of this paragraph means the person who at the valuation date was liable to pay the rent to be apportioned).
  (2) Within the prescribed period after service upon him of the notice of apportionment the claimant or any person intervening or the lessee may give notice in the prescribed manner to the Board of Trade that he claims to have the apportionment referred to and determined by the High Court and if any such notice be given the apportionment shall be so referred and determined in accordance with rules to be prescribed.
  The noble Lord said: Certain Amendments to Clause 10 were accepted by the Committee last time we met, and the two Amendments that now stand in my name appear to be necessary to supplement the provisions of the new Clause 10 as it stands at present. I do not know how far it will be accurate to say that the Amendments are consequential on the altered condition of Clause 10, but they would appear to be corollary to the clause in its new form. Perhaps it would serve a useful purpose if, quite briefly, I were to go into the procedure in regard to claims and valuations that will take place. Within the prescribed time an owner must give notice that he intends to make a claim. In due course he is provided with a certificate of the registered particulars of the coal in question. The claimant must then take in an estimate of the valuation of his holding. The Regional Valuation Board arrive at a draft valuation, which is served upon the claimant, who, if he differs from the Board, has a
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  right to be heard by them. The Regional Valuation Board then arrive at their final decision, and if the claimant still has points of difference, then he has a right of appeal to the referee.
  Unless the Schedule is amended, it would appear that the claimant, in taking in his estimate of valuation, would not know what apportionment of rent had been made by the Regional Valuation Board in accordance with Clause 10. The estimate of value by the claimant therefore might be on one basis and the valuation of the Board might be on a totally different basis. The result, it is easy to see, might be an immense number of appeals to the referee. This Amendment is intended to obviate that possibility, and its object is to throw upon the Valuation Board the obligation of making the apportionment required by Clause 10 immediately after the receipt of the notice of registration, and to serve it not only on the claimant but also on any person intervening, and on the lessee. I would stress this service on the lessee, because the lessee under a mineral lease is also entitled to receive notice of the apportionment, as the apportionment of his obligation under the lease under which he holds the minerals would appear to be a matter in which he is vitally interested, and his comments would undoubtedly be of value to the Regional Board.
  The next part of the Amendment deals with the right of claimants, the intervening parties or the lessees to appeal to the High Court. As Clause 10 stands at present it would appear that any matters of difference in regard to valuation are referred to the referee, but any questions in regard to apportionment are dealt with by the High Court. My next Amendment, on page 65, line 38, to add certain words to sub-paragraph (2) of paragraph 11, seeks to provide that the time limit within which an estimate of value must be delivered by the claimant shall run from the date of the service of the notice requiring delivery or the date when the apportionment has been finally settled, whichever is the later. I have tried to be as brief as I can, and I hope that I have made the intention of the Amendments clear. I think they improve the machinery, and I hope they will serve to reduce the number of appeals to referees and save time and considerable expenditure. I beg to move.
  Amendment moved—
  Page 65, line 21, at end insert the said new paragraph.—(Lord Middleton.)
  THE LORD CHANCELLOR (LORD MAUGHAM): This Amendment raises, as I understand it, two very different questions. The first, to which I am afraid I must make a somewhat uncompromising opposition, raises the question whether the lessee shall be a party to a proceeding in which an apportionment of rent is made as between two people who are entitled as landlords—for instance, the Commission, who are going to be landlords of the mines, and the landowner who is going to be landlord of the surface. It does not seem to me to be right or expedient, or likely to save cost to have the lessee there. It is only necessary that he should know that, instead of paying x pounds a year to A, he has now to pay a smaller sum to A and the balance of the total sum, whatever it may be, to B. So long as he knows what he has to pay to the two, and the total amount payable does not exceed what he had to pay before, it does not seem to us in the least relevant to consider precisely how that sum is apportioned. It is an apportionment of a sum which he owes to one or the other, and the sum of the two must amount to not a penny more than he had to pay before. Accordingly, as regards the presence of the lessee, the view taken on behalf of the Government is that the lessee is not properly a party to the valuation.
  LORD MIDDLETON: I wonder if I have not made myself clear. I did not suggest that he should be present, but that he should receive a notification at the beginning of the proceedings. I did not suggest that he should be present anywhere.
  THE LORD CHANCELLOR: I am afraid then we have misunderstood the object of the Amendment in that respect—that the notice of the claim to all persons intervening is intended to be a notice which entitles them to appear—but if all the noble Lord wishes is that the lessee shall have notice of the result of the apportionment, which is a thing with which he is concerned, I think it ought to be provided for. I think it has been rather assumed that he would get such a notice, but I see no reason why it should not be made perfectly clear.
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  In that case it is notice of the result of the proceedings, and that he certainly should have, because he has to know what he has to pay to A and B, A being the Commission and B the owner of the surface. There is no difficulty in that, and I am prepared to meet the noble Lord.
  The other point is this, that as the matter stands the apportionment made by the Valuation Board has the degree of finality proposed by the new Clause 10, which the House has already approved, and as to that there is a question whether some Amendment of that course might not be proposed. It is undesirable, I think, in such a case as an apportionment of rent, that there should be any large expense involved. The noble Lord is probably aware that in a large number of existing leases, where there is a lease of the surface and of the minerals, the lease itself contains a separate rent for the minerals and for the surface. Therefore in those cases there is no difficulty; but I agree that there may be cases of difficulty, and there may be cases in which the persons concerned, the owner of the surface and the person who is going to become the owner of the surface, might wish some other tribunal than the Valuation Board to settle the matter.
  The best suggestion I can make, without at the moment pledging the Government to it, is that it might be proper to introduce at the appropriate place a provision that the owner should have an option to go before the Commission for the purposes of the apportionment, or should have a right to go to arbitration. But it should be observed that the position suggested, that there may be both a proceeding before the Commission and, as I understand it, an apportionment subsequently by the High Court, is a cumbrous proceeding, which will involve the landowner in a good deal of costs. It would be, I think, much more satisfactory, in a case which is not a very complicated one, to have a decision once for all.
  If the noble Lord cared to move on another stage that the landowner ought to have the option which I have mentioned—when I say "landowner" that is intended to be a short way of stating the claimant or any other person intervening—the Government would be very

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  glad to consider it, and as at present advised I do not think it would be an unreasonable course. The Coal Commission will probably have enough to do, and will be quite glad to have a certain amount of relief in respect of apportionment in difficult cases, but in the vast majority of cases it would be perfectly easy, partly because the apportionment is already done in the lease and partly because in numerous cases there can be no doubt of the rent payable in respect of the surface, being something which can be readily ascertained. That is the proposal which I make. The Amendment in its present form I am unable to accept.
  LORD MIDDLETON: May I ask one question? If I understood the Lord Chancellor aright he is saying that in these difficult cases the matter should be referred to arbitration rather than to the Court.
  THE LORD CHANCELLOR: I was suggesting to the noble Lord that the landowner, or persons intervening, if agreed, should have the option either to go before the Coal Commission, and if they do to accept their finding, or to the arbitrator, and in that case accept the arbitrator's finding. I do not want two bites at this very small cherry. That is all I suggested.
  LORD MIDDLETON: I am prepared to accept that. I will withdraw my Amendment, and reconsider the matter before the Report stage.
  Amendment, by leave, withdrawn.
  THE PRESIDENT OF THE BOARD OF EDUCATION (EARL STANHOPE)THE PRESIDENT OF THE BOARD OF EDUCATION (EARL STANHOPE) moved, in sub-paragraph (4) of paragraph n, after "Act," to insert "or to coal or a mine of which a person is entitled to require a lease to be granted to him under Section twelve of this Act." The noble Earl said: This is really, in a sense, consequential on the last Amendment on the Paper, which stands in my name. Your Lordships will see that there it is proposed that the freeholders of coal should be left in the same position after the passing of this Bill as they are in to-day. The result of that is that they have no incentive to see that the valuation is properly made and need not take trouble about putting in all the full particulars. Therefore, to safeguard the
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  situation, it is proposed that these words should be inserted to say that the Coal Commission shall have the right of appearing before the Regional Valuation Board if they have reason to think that me of the particulars perhaps have not been put in which ought to have been put in. I think the Amendment only gives to the Coal Commission the opportunity to do what we believe to be necessary.
  Amendment moved—
  Page 66, line 10, after ("Act") insert the said words.—(Earl Stanhope.)
  LORD HASTINGS: In this sub-paragraph the words are:
  "When the Regional Valuation Board have settled a draft of their valuation of a holding they shall give notice thereof in the prescribed form to the claimant, and, if the valuation relates to subsidiary coal hereditaments within the meaning of Section six of this Act, to the Commission, and, if the claimant, or, in the case aforesaid, the Commission. …"
  Should it not be "to the Commission also"? There are certain ambiguities, it appears to me, in the words that follow after that. I would suppose that the claimant would be given particulars of his valuation of subsidiary coal hereditaments just as he would of his valuation of principal coal heraditaments, but it does not say so.
  EARL STANHOPE: I think my noble friend is right, though I am not quite sure. Perhaps he will leave it over till Report.
  LORD HASTINGS: I will with the greatest pleasure. I will put it down on Report.
  EARL STANHOPE: Another slight Amendment would be necessary in the next line; it would now be necessary to say "cases aforesaid," and not "case aforesaid."
  VISCOUNT HORNE OF SLAMANNAN: I am very glad to acquiesce in the proposal now made on the ground that we have now arrived at agreement in principle upon what ought to be said in Clause 12. I take it that the words which the noble Earl is proposing on Clause 12 are subject to such Amendments as we may think necessary to propose upon the Report stage, if there is any variation of words which would better satisfy the meaning at which I think we have both arrived?
  EARL STANHOPE: It will certainly be open to the noble Viscount to propose Amendments on the Report stage, either of substance or verbal Amendments.
  On Question, Amendment agreed to.
  EARL STANHOPE EARL STANHOPE moved, in subparagraph (6) of paragraph 12, after "Act," to insert "or to coal or a mine of which a person is entitled to require a lease to be granted to him under Section twelve of this Act". The noble Earl said: This is a similar Amendment to the last and allows the Coal Commission to appear before a referee if a case should be put to the referee.
  Amendment moved—
  Page 67, line 35 after ("Act") insert the said words.—(Earl Stanhope.)
  On Question, Amendment agreed to.
  LORD BALFOUR OF BURLEIGH LORD BALFOUR OF BURLEIGH moved, in sub-paragraph (1) of paragraph 19, to leave out "before the vesting date, or after that date but before the relevant certificates have become conclusive under paragraph 17 of this Schedule" and insert "before or after the vesting date." The noble Lord said: Paragraph 19 of this Schedule has to do with payments on account. As the Bill stands it gives discretion to the Commission to make payments on account at any time before the vesting date, or after that date but before the relevant certificates have become conclusive under paragraph 17 of this Schedule. It seems to me there is no reason why the discretion of the Commission to make payments on account should be limited in that way. After the relevant certificates have become conclusive an interval will elapse before payment must be made, and what I desire to secure by this Amendment is that the discretion of the Commission to make a payment on account during that period shall not be limited.
  I imagine that as the Bill stands it is clear there can be no payment on account after a certificate is conclusive. It may be very important for the royalty owner to receive a payment on account, possibly in order to satisfy demands under mortgages. I think in any case an interval must elapse after the relevant certificates have become conclusive, even if there is no dispute. But I imagine that the whole matter might be held up by a dispute. For those two reasons—the fact that in any case there is an interval, and
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  that in certain circumstances of litigation there might be a long interval—it seems only reasonable that the Commission's discretion to make payments on account should be unfettered. There is nothing mandatory about it; it simply gives the Commission the discretion, which I think your Lordships will agree they ought to have. This point was raised in another place, and on the assurance of the Minister in charge of the Bill that the point would be looked into, the Amendment was withdrawn. I have no doubt that since then the Government have had the opportunity of examining the point, and if the noble and learned Lord cannot give way I shall be glad to know the reason why the words cannot be put in.
  Amendment moved—
  Page 72, leave out from ("time") in line 26 to ("the") in line 28 and insert ("before or after the vesting date").—(Lord Balfour of Burleigh.)
  THE EARL OF MUNSTER: This paragraph is required only to enable the Coal Commission to make payment on account before the payment of compensation is due; that is to say, after the vesting date and before the certificate of valuation has become conclusive. As soon as the payment becomes due the Commission can of course pay either part or whole, and I am advised that it really does not need the insertion of a special paragraph.
  THE EARL OF DUDLEY: That does not quite answer my noble friend's question, because he pointed out that under paragraph 17 (1) (a), in the case of dispute the High Court may by interim order direct the Commission to suspend the payment of compensation on the basis of the certificates sent. That dispute may take some time, and meanwhile why should not the payments on account continue over that period? It may mean that the claimant will go without his conclusive certificate or payment on account for a very considerable period, and I cannot see the reason why it should not be extended beyond the period in doubt.
  LORD BALFOUR OF BURLEIGH: The noble Earl the Leader of the House told us a day or two ago that the inclusion of half a dozen extra words was a matter of real importance so far as printing and stationery are concerned. This Amendment is much simpler and clearer and saves at least a line and a half. I hope that argument will please the noble Earl.
  THE LORD CHANCELLOR: I am not sure that the noble Lord has quite appreciated the first two lines of paragraph 19. The risk is not that there may be a period after the vesting date and before the relevant certificate has become conclusive, because this paragraph authorises payments on account at any time before the vesting date, or after that date but before the relevant certificates have become conclusive. So that, supposing there is an appeal or something of that nature, with the result that the relevant certificate has not become conclusive, the clause will apply and the Commission can pay sums on account. But after that moment when the certificate is conclusive and the vesting date has come, there is a debt due from the Commission to the owner of the coal. The Commission can be sued for it, and they are bound to pay. There may be a moment of time, so to speak, before they actually do pay, but you may be quite sure that not only will they want to pay, but if they cannot pay the whole debt when it is due, they will be most anxious to pay as much as they can. But you do not want an Act of Parliament to say that a man who owes a debt should pay half of it if he can. Here we are dealing with a debt due, and you do not want to say they may pay half, three-quarters, or all of it; they are bound to pay the whole of it. Therefore you do not want the Amendment.
  LORD BALFOUR OF BURLEIGH: Is it not the fact that the Commission have to give three months' notice in writing? I was under the impression there was a three months' gap. If there is no gap after the relevant certificate has become conclusive, then of course I at once agree with the noble and learned Lord, but if there is a gap they ought to have discretion.
  THE LORD CHANCELLOR: I agree with the noble Lord, but the gap has only reference to payments on account before the vesting date, except by consent. It was thought that if you are asking a person to take payment on account before the vesting date has arrived, you ought to give him three months' notice. He might say, "I would rather have the money now," in which case he takes money on account. But the gap does not apply after the vesting date. The Commission owe the money, and there is no
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  doubt they ought to pay at once if they can.
  LORD BALFOUR OF BURLEIGH: I thank the noble and learned Lord for his explanation, and I beg leave to withdraw.
  Amendment, by leave, withdrawn.
  EARL STANHOPE EARL STANHOPE moved, in sub-paragraph (3) of paragraph 19, to leave out "all purposes, including." The noble Earl said: These words were put in in another place but they went too far. What is intended here is that the interest shall be treated as capital for purposes of Income Tax and Surtax so that tax has not to be paid on that interest. The words "for all purposes" go too far, and might put the person who received the payment in a difficulty in regard to other claims made upon him, possibly by those who have settlement claims and so on. Therefore it is thought, in the interests of the person who receives the payment, that these words "all purposes, including" should be left out and that the provision should apply only to Income Tax and Surtax.
  Amendment moved—
  Page 73, line 10, leave out ("all purposes, including").—(Earl Stanhope.)
  On Question, Amendment agreed to.
  LORD DARCY (DE KNAYTH)LORD DARCY (DE KNAYTH) moved, at the end of sub-paragraph (3) of paragraph 19, to insert "and shall be treated for the purposes of Income Tax and Surtax as a charge upon and a proper deduction from income." The noble Lord said: The noble and learned Lord has very kindly explained to me the position in regard to this matter. As regards the words "substantial justice requires," we are in complete agreement. There is, however, some scope for argument as to the effect of the actual words in the Bill, and I think the noble and learned Lord agrees with me in regard to that. There is a further matter. The noble and learned Lord also considers there is scope for some improvement in the words of my Amendment, and I am in complete agreement with him in that. I beg to move.
  Amendment moved—
  Page 73, line 13, at end insert the said words.—(Lord Darcy (de Knayth).)
  THE LORD CHANCELLOR: These paragraphs are, as every one will agree, not easy to understand. The view of the Government is that sub-paragraph (3) on

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  page 73 carries out the intention and precludes the sum which is to be treated as capital being a sum in respect of which the recipient is to be liable for the purposes of the Income Tax Acts. But, as I am all in favour of clarity, I should be willing if the noble Lord will substitute for the words he wants to add at the end of line 13, these words which I will now read out:
  "and accordingly shall be treated as a proper deduction from income."
  If he will substitute these words for the words which he has in his Amendment, we shall be ready to accept the Amendment, and that will finish off Schedule 3. Then we can get rid of that, and to some extent relieve the Report stage.
  LORD DARCY (DE KNAYTH): In these circumstances I beg leave to withdraw my Amendment and thereafter to move in the form suggested by the noble and learned Lord.
  Amendment, by leave, withdrawn.
  LORD DARCY (DE KNAYTH): I beg to move the Amendment suggested by the Lord Chancellor.
  Amendment moved—
  Page 73, line 13, at end insert ("and accordingly shall be treated as a proper deduction from income").—(Lord Darcy (de Knayth).)
  On Question, Amendment agreed to.
  LORD HASTINGS LORD HASTINGS had given Notice of an Amendment to leave out sub-paragraph (1) of paragraph 20. The noble Lord said: I put this Amendment on the Paper before the noble and learned Lord put down his Amendment completely altering the character of paragraphs 20 and 21. My purpose in putting the Amendment down was to enable me to discuss the difficult situation which will arise in such cases as will happen when the compensation payments made are only sufficient to meet the mortgage charges and the capital required to be set aside for the amount of annuity and so forth. As the noble and learned Lord has put down an Amendment to deal with the whole paragraph, I would prefer, if the Committee will allow me, to await his explanation of the new paragraph, which is exceedingly difficult to follow. Therefore I will not move my Amendment, but take leave to debate the question on the noble and learned Lord's Amendment.
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  That would be the more convenient course, and, in point of fact, if I were to speak to my own Amendment and press it to a Division, it would not really help me in achieving what I desire. It was only put down as a means of asking questions and raising debate.
  THE LORD CHAIRMAN: Perhaps I ought to explain, in regard to the next Amendment standing in the name of the noble and learned Lord, the Lord Chancellor, that the Question I will put will be to leave out paragraph 20 only in the first place, because the noble Lord, Lord Cromwell, has an Amendment on the Paper at the end of paragraph 20, and in addition to that the noble Earl, Lord Dudley, has three Amendments as follows, as Amendments to the Amendment by the Lord Chancellor:
  In sub-paragraph (5), line 8, after "shares" to insert "or the ordinary, preferred, or deferred or other stock or shares";
  in sub-paragraph (5), line 11, after "United Kingdom" to insert "or the Legislature of any British Dominion, Colony, State or Dependency";
  in sub-paragraph (5), line 14, leave out "five" and insert "three."
  THE LORD CHANCELLOR THE LORD CHANCELLOR moved to leave out paragraphs 20 and 21, and insert:
  "20.—(1) The compensation for a holding when paid by the Commission to the person entitled to receive it from them, including any sum paid on account thereof under the last preceding paragraph, and the income thereof, shall, in order to its being applied as compensation to the persons whose interests are comprised in the holding, be held and disposed of for the benefit of those persons, or their personal representatives or assigns, in accordance with the succeeding provisions of this paragraph.
  (2) In the case of a holding that consists of or comprises an estate or other interest subject to a settlement within the meaning of the Settled Land Act, 1925, or to a trust for sale the proceeds whereof are subject to a settlement by way of succession, the trustees of the settlement or the Court, and in the case of the Court on the application of any beneficiary under the settlement, may require and cause the compensation, or the part thereof attributable to that estate or other interest, as the case may be, to be laid out, invested, accumulated, and paid in such manner as, in the judgment of the trustees or of the Court, as the case may be, will give to the beneficiaries under the settlement the like benefit therefrom as they might lawfully have had from that estate or other interest, or as near thereto as may be, regard being had, when the circumstances so require, to the fact that that estate or other interest was property of a wasting character:

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  Provided that—

  (a) where a payment on account of the compensation for the holding has been made under the preceding paragraph before the vesting date, the net income accruing to the trustees before the vesting date from the investment of the sum paid up to an amount sufficient to make good to the capital of the settlement the interest on that sum brought into account under the last preceding paragraph against the capital of the compensation, shall be set aside as capital of the settlement;

  (b) subject as aforesaid no part of the income of the compensation shall be required or caused by virtue of this subparagraph to be set aside as capital of the settlement.

  (3) In the case of a holding that comprises an estate or other interest subject to a mortgage, the compensation (other than any part thereof that is attributable to an estate or other interest not subject to the mortgage) shall be held and disposed of in like manner as if it had been money arising under a power of sale conferred by the mortgage.
  (4) In the case of a holding that could have been sold as mentioned in sub-paragraph (a) of paragraph eighteen of this Schedule under powers conferred by the Ecclesiastical Leasing Acts, the compensation paid in respect thereof and the income thereof shall be held and disposed of, and the said Acts shall have effect, in like manner as if the compensation had been money paid to the Ecclesiastical Commissioners upon a sale under the said Acts of the premises in which the holding subsisted:—
  Provided that—

  (a) if the holding was a reversion and the rent reserved by the lease was subject, by virtue of a scheme in force under the said Acts, to a direction for the payment thereof to the Ecclesiastical Commissioners for the benefit of their common fund, the direction shall have effect in relation to the income of the compensation as it had effect in relation to the rent; and

  (b) where a payment on account of the compensation for the holding has been made under the preceding paragraph before the vesting date, the net income accruing before the vesting date from the investment of the sum paid shall be set aside as capital of the compensation.

  (5) Money representing compensation attributable to an estate 01 other interest subject to such a settlement as is mentioned in sub-paragraph (2) of this paragraph, or vested in trustees on or for charitable, ecclesiastical or public trusts or purposes, may, notwithstanding anything in the relevant trust instrument, be invested not only as authorised by law or by the trust instrument but also in or on the debentures or debenture stock or the preference or wholly or partially guaranteed stock or shares of any company incorporated by a special Act of, or provisional order confirmed by, or by or under a Public General Act of, the Parliament of the United Kingdom, or incorporated by Royal Charter, being a company which has paid dividends upon its ordinary capital at the rate of at least three per cent. per annum for at least the five years next before the time of investment (of which fact a letter purporting to be signed
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  by the secretary of the company or by a banker or member of a firm of bankers or by the secretary or manager of a joint stock bank or of any branch thereof shall be sufficient evidence):
  Provided that the power conferred by this sub-paragraph—

  (a) shall not extend to any stock shares or securities to bearer or subject to any liability for calls or other payments; and

  (b) shall be exercisable subject to any consent that would have been requisite if the money had been proposed to be invested as authorised by law or by the trust instrument.

  (6) Subject as aforesaid the compensation for a holding and the income thereof shall be held and disposed of in such manner as to confer on the existing owners whose interests are comprised in the holding, their personal representatives or assigns, the like benefits so far as may be, as they would have had from their respective interests in the premises in which the holding subsisted if those premises had not been acquired by the Commission."
  The noble and learned Lord said: As Lord Hastings has pointed out, this Amendment is of an elaborate character and to some extent, at any rate, may be thought to alter the provisions of paragraph 20 as it stands in the Bill; but the substance of it is really the same, only the circumstances which may arise when compensation has to be divided up as between diverse beneficial interests are so complex that it is very desirable, not perhaps so much when the case goes before the Court, but when the case is settled without application to the Court, to state with the greatest possible care the principles on which that compensation should be disposed of. I hope I am not saying anything I ought not to say when I add that I have taken the greatest care, with the advice of people who are eminent in their particular spheres, in connection with the draft of the Amendment so as to state all the various circumstances, as far as I could, which have to be taken into account in making this division. Perhaps your Lordships will allow me to say this at this stage. The noble Lord, Lord Cromwell, has a somewhat elaborate provision, the subject of the next Amendment, where, apparently as the result of very considerable care, he has put down the species of Amendment which he thought was proper, but I think in reference to the old paragraph and not the new one. Without desiring to anticipate anything which Lord Cromwell may say, I was interested to see that his Amendment to a very large extent was identical in substance with the Amendment which stands on the Paper in my name and the

  731
  name of the noble Earl, Lord Stanhope. I was proposing to take one or two passages from his Amendment and, on the Report stage, to put them in this present elaborate Amendment standing in my name and that of the noble Earl, Lord Stanhope, in order, as far as humanly possible, to get a perfect clause stating the circumstances that have to be taken into account on the division of compensation in these circumstances.
  What we have done is this. In subparagraph (1) we state the general principles on which the compensation is to be divided. It may, of course, be paid to a person absolutely entitled to receive it or it may be paid to persons entitled other than the original person; for instance, there may be a person who has a charge, or there may be, unfortunately, a death, and some of the compensation may go to personal representatives. That is all general and there is no difficulty. That has been separated from sub-paragraph (2), because (1) does not relate to settlements and sub-paragraph (2) does relate to settlements, and here we get a very complex state of things in certain circumstances. There may be a settlement within the meaning of the Settled Land Act, 1925, in the ordinary way, or there may be, after the legislation of 1925, a settlement by way of a trust for sale, because there is a statutory trust for sale, or there may be a statutory or other trust for sale and a provision with regard to the proceeds of the sale which go by way of succession to various people. Then the trustees of the settlement or the Court—and, in the case of the Court, on the application of any beneficiary under the settlement—may require the compensation to be laid out, invested, accumulated and paid in such manner as in the judgment of the trustees or the Court, as the case may be, will give to the beneficiaries under the settlement just the same benefit and interest, or as near thereto as may be, as they might have had before the operation of this Bill.
  Then there are provisos that where a payment on account is made—I should mention this because, inferentially, it deals with another Amendment that stands on the Paper—before the vesting date (I am not sure that that ought not to be before the vesting date or before the relevant certificates have become conclusive).
  732
  "the net income accruing to the trustees before the date from the investment of the sum paid, up to an amount sufficient to make good to the capital of the settlement the interest on that sum brought into account under the last preceding paragraph against the capital of the compensation, shall be set aside as capital of the settlement."
  That carries out almost, I think, exactly the Amendment which your Lordships are going to have read to you in due course. Then, subject to that, no part of the income of the compensation shall be required or caused by virtue of the sub-paragraph to be set aside as capital of the settlement. Sub-paragraph (3) says that in the case of a holding that comprises an estate or other interest subject to a mortgage, or charge, the compensation is to be disposed of as if it had been money arising under a power of sale conferred by the mortgage. Then I must state quite frankly to my noble friend Lord Hastings, that the Government take the view that if there is a mortgage on the property the mortgagee must be paid. There is, unfortunately, no possible method known to legislation or the law under which a mortgagee who has a debt secured on property shall not be paid from the property in priority to the mortgagor.
  There follow, in sub-paragraph (4), provisions which relate to the Ecclesiastical Leasing Acts with which I think I need not trouble your Lordships because they have been agreed, as I understand, with the Ecclesiastical Commissioners. Then (5) relates to investment. We have thought it right to authorise investments on terms substantially wider than those permitted to trustees under the Settled Land Act, 1925, or under other General Acts of that character, and substantially wider than is usual in regard to persons who hold money substantially as trustees and who have a Special Act. What we propose to add to the ordinary law in this respect is that we propose that investment should be authorised in debentures or debenture stock, or the preference or wholly or partially guaranteed stock or shares of any company incorporated by a special Act of, or provisional order confirmed by, or by or under a Public General Act of Parliament, or incorporated by Royal Charter, being a company that has paid dividends upon its ordinary capital at the rate of at least 3 per cent, per annum for at least the five years next before the time of investment.
  There is a provision with regard to evidence of that, and then we exclude, as everybody would wish to exclude, the stocks to bearer which occasionally lead to disastrous consequences when they are held by trustees, and stocks which are subject to liability for calls. We are also dealing with the question of consent, because in many investment clauses there is provision for the consent of the tenant for life or somebody of that character—that the power shall be exercisable only with his consent—and we make that apply also to investments made under sub-paragraph (5), subject to the compensation for a holding, and the income is to be held and disposed of as far as possible so as to confer on the existing owners the like benefits as they would have had if the premises had not been acquired by the Commission. There are some things in the Amendment of the noble Lord, Lord Cromwell, which in my view make the matter clearer. Therefore I propose on behalf of the Government to assent to those parts of his Amendment which I think are not included in the Amendment which stands in my name. It will be for him to say whether he would like on the Report stage these things to be included or not. I would not want in the least to bind him at the present moment.
  That is the general effect of the proposed new paragraph 20 on page 73. It is more elaborate and it will occasion a little bit more in printing. The comment by my noble friend Lord Balfour of Burleigh must therefore be considered as affecting my conscience. I cannot help it. I have thought it absolutely essential to provide for a paragraph which will really make the matter reasonably clear to any person or any Judge who has to fulfil the task of dividing up the compensation. It will be for the noble Earl, Lord Dudley, to move his Amendments and I shall have some difficulty in assenting to them because I think they go too far. However, it would be premature to deal with that now. I hope that the explanation I have given is a sufficient one for the purpose of my noble friend Lord Hastings, and if there is any other question which he wishes to ask on this elaborate Amendment I can only say that I will do my best to answer him.
  Amendment moved—
  734
  Page 73, line 21, leave out paragraphs 20 and 21 and insert the said new paragraph.—(The Lord Chancellor.)
  THE LORD CHAIRMAN: I will put the Question that paragraph 20 stand part of the Bill, leaving aside paragraph 21 in order to save the Amendments of the noble Lord, Lord Cromwell. The noble Earl, Lord Dudley, has handed in three Amendments to the proposed Amendment.
  THE EARL OF DUDLEY: Is it time for me to move them?
  THE LORD CHAIRMAN: That is the usual course. If the Amendment to the Amendment is negatived then we can take the Amendment.
  THE EARL OF DUDLEY: I beg to move the manuscript Amendments which have been read by the Lord Chairman. As the noble and learned Lord, the Lord Chancellor has told your Lordships, they make the provisions of sub-paragraph (5) in his Amendment rather wider. There was an Amendment standing in my name after Clause 7 which referred to the investment by trustees of compensation moneys. I thought at first that it was covered by the Amendment of the noble and learned Lord, but I find that my Amendment was a good deal wider in that I proposed that the investment should apply to ordinary shares and stocks of companies and not limited, as it is in the Amendment of the noble and learned Lord, to
  "debentures or debenture stock or the preference or wholly or partially guaranteed stock or shares of any company incorporated by a special Act of, or provisional order confirmed by, or by or under a Public General Act of, the Parliament of the United Kingdom, or incorporated by Royal Charter,"
  and so on. I do feel that it is only fair and right that compensated royalty owners should be given the opportunity of making up the loss in income which they will have to suffer by investing these moneys in the ordinary shares and stock of companies.
  The royalties have been assessed at a 7 per cent. risk. The Greene Committee, as we know, applied the 7 per cent, table to them and regarded them as a 7 per cent. risk. We have been told frequently during the course of these debates that royalties are a wasting asset and can by no means be regarded in the same category

  735
  as a gilt-edged investment. Therefore it does seem rather illogical to narrow down the investment range of the trustees of the compensation money to debentures and stocks which cannot possibly give anything like the yield of 7 per cent. on which the valuation was made. I feel that they ought to be allowed to invest in ordinary stocks or shares. As the Bill at present stands the royalty owners would be precluded, for instance, from investing compensation money in the ordinary shares of the colliery company engaged in working the coal which was lately their property. They could not, either, purchase a partnership in a well-established business, which I maintain they ought to be allowed to do. I hope that the noble and learned Lord will see his way to give the matter further consideration. I make a very earnest appeal to him to consider the matter further and see whether he could not possibly widen the power to the same extent as I propose in the second part of my Amendment—that is, to widen the power of investment from the United Kingdom to Colonial and Dominion stock as well.
  The third part of my Amendment is to provide that the investment should be limited to a company which has paid a dividend upon ordinary capital at the rate of at least 3 per cent. per annum for at least the three years next before the time of investment, instead of five years as in the Amendment of the noble and learned Lord. I think three years is the usual time in these cases and five years is a little too long. I hope I shall have your Lordships with me, because I think that you will agree that it is only right that compensated royalty owners who are suffering a great loss of income should be able to make up that loss in this way and turn the compensation money to better account than they are likely to do under the noble and learned Lord Chancellor's Amendment.
  Amendment to the proposed Amendment moved—
  In sub-paragraph (5), line 8, after ("shares") insert ("or the ordinary, preferred, or deferred or other stock or shares").—(The Earl of Dudley.)
  THE LORD CHANCELLOR: I confess that I wish I could consent to this, but it would be contrary to all proper dealing with trustee stocks. The Amend-
  736
  ment which the noble Earl wishes to make would include shares in all sorts of companies which are really by no means satisfactory investments. There are many companies at the present time which have paid over 3 per cent, interest for over three years, and which pay at the present time a far greater dividend than 7 per cent. There are many, against which so far as I know nothing can be said, which pay over 10 per cent. On the Stock Exchange they are not considered to be investments that can safely be relied upon to go on making that payment. In other words, they are considerably worse than any ordinary investment in coal and would provide for the tenant for life a far larger rate of interest.
  When dealing with trustee stocks it is necessary for the legislator, so far as he can, to permit only investments which, if not absolutely gilt-edged investments, are such that there is a reasonable probability of their being regarded as permanent investments, which will not result in any very large loss of capital at any time. In those circumstances, much as I should like to increase the scope of the investments mentioned in sub-paragraph (5) of this paragraph, I cannot see how we are to do it without letting in investments which are wholly unsuitable for trustees. If I could, I would, and if between now and Report stage the noble Earl will think of something which is almost certain, an investment such as trustees might use for trust moneys and yet will not include in its scope something that might normally be described as a wild-cat investment, I should be very happy to accept it. The present Amendment, however, I am unable to accept.
  THE EARL OF DUDLEY: I would not of course dream of arguing with the noble and learned Lord in regard to the law and what is fit and proper for trustees to do. But I should like to point out that under the provisions of both Amendments the trustees in the name of the tenant for life are prevented from making a wild-cat investment. They are not, for instance, allowed to invest in a Russian oilfield, or anything of that sort, because the provisions do not permit them to do so. Of course I am not going to press this Amendment, but I hope that the noble and learned Lord will consider, between now and Report stage, whether there is not any possibility of widening the

  737
  powers of trustees in this respect. It would save to a great extent the hardship which the royalty owners feel in having to suffer this loss of income. With regard to loss of capital, of course almost any investment runs, that risk, particularly gilt-edged, in these days. I hope the noble and learned Lord will look into the matter, because I feel that it is necessary to do justice to the royalty owners.
  THE LORD CHANCELLOR: I shall be only too glad to look into the matter, and I hope the noble Earl himself will look into the matter and perhaps produce some Amendment which can be accepted.
  THE EARL OF DUDLEY: I am very grateful to the noble Lord, and I beg leave to withdraw the Amendment.
  Amendment to the proposed Amendment, by leave, withdrawn.
  LORD HASTINGS: I was very glad to refrain from speaking to my own Amendment until after the noble and learned Lord had spoken to his, because the explanation of the very complicated provisions which that Amendment contains has been helpful, not only to myself, but also to the Committee in general. It is quite evident that the Amendment standing in the noble and learned Lord's name deals with, or deliberately omits to deal with, three specific points. It deals with the case of the trustees, of a tenant for life who, in the interests of the tenant for life, would desire to seek a wider range of investments than is now permitted. It deals also to some extent with the case of the trustees for an annuitant or other person with a charge upon the estate, and it deliberately omits to deal with the third case, which is that of the mortgage, when a corporation, individual or firm has a mortgage charged, in the main, not upon income but upon the minerals themselves. I think I am right in saying that it is the intention of the Amendment to deal with these three points, or to omit to deal with one of them.
  THE LORD CHANCELLOR: Not to omit to deal with one. Paragraph 20 (3), at the top of page 4 of the Order Paper, deals with the case of mortgages. Is anything more wanted?
  LORD HASTINGS: It does in a sense, but as I read it, it says that nothing can be done in the matter.
  THE LORD CHANCELLOR: That is true.
  LORD HASTINGS: It deals with it in that sense. That, of course, is strictly accurate. In the case of an annuity or other form of charge upon mineral income, it appears that the Amendment intends that either the trustee of the settlement or a beneficiary can move the Court into determining a proper division of the compensation moneys. That meets what appears to me to be a very grave risk, not fully but to a reasonable extent. A number of cases have come to my personal notice in which the trustees for the tenant for life in some cases, the absolute owner himself in other cases, are fearful that when their compensation moneys are paid over to them—taking the average basis of fifteen years' purchase, of course, because no man can tell at the moment actually how many years' purchase he will receive—the charges upon the estate of which they are trustees, or absolute owners, as the case may be, may absorb the whole of the compensation money. There are certain cases in which that will inevitably and unquestionably occur. In how many cases it will occur, it is impossible for me or for any one else, I think, to say. It would be very useful if we could say. But quite clearly the Mineral Owners' Association has no means of ascertaining the facts, and I doubt whether there is any organisation or authority who has any means of ascertaining the facts. The only persons who might conceivably be able to do so would be the Special Commissioners for Surtax, but I doubt whether they would ever do it, because so many of these cases come below the Surtax-paying level and therefore outside the purview of the Special Commissioners.
  It is not the larger owner but the relatively smaller owner who is endangered by the provisions of this Bill. The public have been brought up to believe that all royalty owners are persons of great wealth, which is absurd. Although it is granted that some few are, there are a very large number of persons deriving a few hundred pounds a year from mineral income who are almost entirely dependent upon that income, and it is those persons who have been agitating to find out how their case can be met. If you have compensation money paid over on the basis of fifteen years' purchase, which will mean about half the capital sum when related to present income, and you have a mortgage combined

  739
  with charges which will absorb the whole of it, then of course the nominal owner of the minerals who is receiving the compensation will be left penurious. It is a very serious situation. It is a social question, of course, and one which requires the greatest thought by the Government. The noble and learned Lord has told us that neither he nor the Government see any way of meeting the case in this Bill. I am sure the noble and learned Lord would not have said that unless it were strictly in accordance with fact. Of course I clearly do not suspect anything of the kind. But, acknowledging that it is impossible to put it into this Bill, that does not mean that the Government are really immune or, shall we say, free from some responsibility for what must result in a certain number of cases. What will happen in three and a half years' time, when the vesting date comes along and a substantial number of persons are driven into the Bankruptcy Court who say: "I am not bankrupt through any fault of mine; I have been deprived of half my resources by the action of His Majesty's Government; I am a bankrupt, and the people who have made me a bankrupt are His Majesty's Government"? What is to be done about it?
  No noble Lord on that side of the House would like to hear that sort of thing said. Think of the consequences to the country. Here, this unhappy Bill has made enough enemies for the Government already, in all conscience. How many more will it make if cases of this kind develop in any number? There may be relatively few mineral owners, relatively few persons up and down the country affected by the Bill at all, but they are, in the majority of cases, people of some influence, people upon whom this Government are dependent for good will in the constituencies, and they are very essential from a practical point of view. You cannot deliberately, with your eyes open, go and drive your own supporters into the Bankruptcy Court. Surely it ought to be possible, in consultation with the Treasury, to provide that there shall be a sum set aside for meeting all hard cases, so that persons placed as I have envisaged they will be placed will be able to go to the Court and apply for additional aid—that is what it will come to. I do not think you can allow this Bill to pass out of this House
  740
  and pretend, ostrich-like, that those cases are not going to occur. It is a matter which has got to be dealt with, and I have not been able to devise, of my own drafting, an Amendment which I could apply to this Bill. The noble and learned Lord told us that it is impossible, and I accept it as a fact; but of course it is not impossible to provide some sum, supplemental, let us say, to the subsidiary hereditaments sum, for which these persons shall have leave to apply when their case is of a kind which definitely requires relief, to prevent them from sliding into the condition of penury which this Bill will otherwise push them into.
  With regard to the matter of annuities, and so on, although it is difficult to understand, I think probably I have an obligation to be satisfied with the endeavour which the Government have made to see to it that the whole of the compensation money, or an unfair share of the compensation money, is not taken away by the trustees for a settlement, leaving the nominal owner of the minerals destitute. That, I am sure, is the intention of the Government in the paragraph, and I could not myself devise a better method than has been adopted. With regard to the point on which Lord Dudley was not entirely satisfied, but on which the Government gave us clearly to understand that they were not able to give way, tenants for life will be anxious that there shall be a wider scope for trustees' investments. Others, the remaindermen, may take a different view of the matter. I am not disposed to intervene in that. The Government have a certain responsibility which they cannot give away. They are responsible for this particular thing, and cannot afford to extend the scope of trustee investments further. That is reasonable, and I am not disposed to contest what the noble and learned Lord has said.
  To revert once more to the question of mortages, I say that the Bill cannot leave this House until some sort of provision is made for the cases of hardship which are bound to result, to the immense disadvantage of the good name of this Government, and also in contravention of ordinary equity, in itself an extremely important matter. I therefore make an appeal to the Government that they should endeavour on the Report stage to think out some means by which these hard

  741
  cases may be provided for. Really I should be disposed to treat the matter so seriously that, if nothing finds its way into the Bill, I shall move the rejection of the Bill on its Third Reading. I do not propose to disagree with the Amendment on the Paper. I am grateful for it, but it does not go far enough.
  EARL STANHOPE: May I say that we have looked into the cases which the noble Lord quotes, and we have done our best to meet them as far as possible. I think he recognises that to deal with the question of mortgages means the raising of additional public money, and that, as the noble Lord knows, is not within the purview of this House, but would have to be done in another place.
  LORD HASTINGS: The noble Earl, the Leader of the House, and the noble and learned Lord are in a far better position than I am to approach the powers that be, who control affairs in another place, to see whether something can be done with their consent.
  LORD CROMWELL: May I ask a ruling from the Lord Chairman as to when I shall have an opportunity of speaking on my Amendment?
  THE LORD CHAIRMAN: I am entirely in the hands of your Lordships, but the procedure I suggested was that we should leave out paragraph 20 and then, if your Lordships agree, put in the Amendment of the noble and learned Lord. Then come the two Amendments of Lord Cromwell which will be taken in the ordinary course. After that the noble and learned Lord can move the omission of paragraph 21, as consequential on his Amendment.
  On Question, Amendment to leave out paragraph 20 and insert the proposed new paragraph agreed to.
  LORD CROMWELL LORD CROMWELL moved to insert the following new sub-paragraphs in paragraph 20:
  "(3) For giving effect to the provisions of sub-paragraph (1) of this paragraph—

  (a) In any case in which an acquired interest was at the valuation date settled land within the meaning of the Settled Land Act, 1925, or vested in trustees upon trust for sale, or vested in a personal representative, and the compensation is not paid into Court, the trustees of the settlement or the trustees for sale or the personal representatives, as the case may be, may and

  742

  (b) In any such case as aforesaid, or where the compensation is paid into Court, or to trustees appointed by the Commission pursuant to sub-paragraph (c) of paragraph 18 of this Schedule, or in any other case, the Court may, on the application of any person interested in the compensation,

  require the compensation to be laid out, invested, accumulated and paid in such manner as, in the judgment of the trustees, the personal representative, or the Court, as the case may be, may be, proper regard being had

  (i) to the terms of any settlement trust, or power affecting the acquired interest or the proceeds of sale thereof, and

  (ii) where the acquired interest is at the valuation date comprised in a subsisting coal-mining lease, to the terms of such lease, including the amount of any minimum rent payable thereunder, and to the amount of any undergetting of coal by the lessees thereunder, and

  (iii) in the case of unopened or unworked mines of coal, and coal, to the date on which working of the coal might reasonably be expected to commence or to recommence, and

  (iv) in all cases to the period within which the coal might reasonably be expected to be worked out, and to all other relevant circumstances.

  (4) All applications to the Court under this paragraph shall be made, in accordance with Rules of Court, to the Chancery Division of the High Court of Justice.
  Provided that the powers of the Court may, as regards compensation payable in respect of an acquired interest comprised in a holding situate in the County Palatine of Lancaster or the County Palatine of Durham be exercised also by the respective Courts of Chancery of those Counties Palatine, and, where the amount of the compensation does not exceed the sum of £500, the powers of the Court may be exercised by any County Court within the district whereof is situate any part of the holding.
  Provided also that any application in respect of compensation paid into Court shall be made to the Court into which the same is paid."
  The noble Lord said: I am very much obliged to the noble and learned Lord for the compliment he has paid me in saying there was something of substance in my Amendment. I would particularly like to thank him for the very generous way in which he has treated me over this matter. I do not know quite whether I should at this stage inform your Lordships that I am prepared to withdraw my Amendment, or whether I may be allowed to say a few words and ask the noble and learned Lord to say a few words in reply. Then I shall be very happy to withdraw my Amendment. If I may be allowed, I want to put three points. The first is whether the noble and learned Lord is satisfied that his

  743
  Amendment, with the addition of some of what appears in my Amendment, inserted on the Report stage, will cover this point, whether sufficient pressure will be put upon the trustees to make an apportionment. Of course it is not intended that the jurisdiction of the Court should be taken away. But I should like to be satisfied that in his clause as it will appear on Report there will be sufficient pressure placed on the trustees to make an apportionment if they can, because I think the trustees will, from the very nature of things, fall back on the Court to make a decision if they possibly can.
  I presume that the principle of the apportionment is based on a section of the Lands Clauses Act, 1845, and with the utmost respect I would say that some of the decisions given by His Majesty's Judges have not proved very satisfactory to those concerned. There was a case in which a tenant for life was given in addition to his income an amount arrived at by dividing the compensation by the number of years required for working out the coal. In the very short term which was left for the coal to be worked out it will work out very well in that case for the tenant for life, but in the case of some who have coal for, we will say, three or four hundred years, and who are only getting fifteen years' purchase, it will work out very much in the opposite direction. There is just one final point. Does the noble and learned Lord think that some clause should be inserted whereby tenants for life receiving such apportionment in addition to their income should not be absolved from paying Income Tax and Surtax on those amounts as, in the nature of things, they are capital?
  Amendment moved—
  Page 73, line 42, at end insert the said new sub-paragraphs.—(Lord Cromwell.)
  THE LORD CHANCELLOR: The position of the trustees in such a case as the noble Lord refers to must depend upon the particular circumstances of the case. There may be a good many cases in which the trustees, either with or without an opinion of counsel, can readily determine how the compensation money is to be distributed, and I think it is almost impossible to put in this paragraph any definition of the cases in which the trustees can act with or without the
  744
  opinion of counsel, and where the opinion of the Court may be desired. So that while I cannot say that there is anything in the clause which stands in my name and I think there is nothing in the noble Lord's Amendment which really brings pressure to bear upon the trustees in such a matter, they have to act reasonably, having regard to the circumstances of the case. That is all I can say with reference to that. In the other respects I am not quite sure that I understand the noble Lord's question. The provision with regard to tax is dealt with in the new paragraph 20, sub-paragraph (2) (a), and that seems to me to go as far as can properly be done. Anything more drastic than that might receive much opposition from the Chancellor of the Exchequer. What we have done here, I venture to think, is a fair compromise in regard to settling what income shall be set aside as capital, if paid on account before the date of vesting. Regarding the noble Lord's other question I am afraid I was not quite able to follow exactly what was needed, but perhaps the noble Lord, if he has any query to make on which I can satisfy him, would be so good as to make it after these proceedings are over, and I shall be very glad to help him as far as I can.
  LORD CROMWELL: I am very much obliged, and I beg leave to withdraw. My only wish is to ensure as far as possible that litigation shall not be entered into except in very exceptional circumstances.
  THE LORD CHANCELLOR: May I add that I presume, if Lord Cromwell approves of the suggestions I have made, he will move on the Report stage certain Amendments to the new paragraph 20 which I venture to think to some extent improve that paragraph, and make it clear as to what the Court or the trustees have to consider.
  Amendment, by leave, withdrawn.
  Amendment moved—
  Page 74, lines 1 to 6, leave out paragraph 21.—(The Lord Chancellor.)
  LORD DARCY (DE KNAYTH)LORD DARCY (DE KNAYTH) had on the Paper an Amendment in paragraph 21, to leave out "shall be set aside as capital" and insert "up to an amount equal to any sum set off against compensation in respect of interest on such payment on account in pursuance of subparagraph (2) of paragraph 19 of this

  745
  Schedule shall be set aside as capital and as regards any balance thereof shall be treated as income." The noble Lord said: I would take the opportunity of thanking the noble and learned Lord for meeting us in this matter. He has incorporated the point we had in mind in that long Amendment which he has just moved, and therefore I do not move.
  On Question, Amendment agreed to.
  LORD BALFOUR OF BURLEIGH LORD BALFOUR OF BURLEIGH moved to insert at the end of Part IV of the Schedule:
  "Expenses of Surface Damage Claims.
  23. The Commission shall pay the costs and expenses reasonably incurred by any person after the vesting date in connection with a claim for compensation in respect of damage arising from the working of coal to the land buildings or other property of such person and to which he may be entitled under the provisions of paragraphs 5 and 6 of the Second Schedule to this Act."
  The noble Lord said: This Amendment is one to which I attach very great importance indeed. It is designed to remove one of the minor blemishes from this unhappy Bill, as the noble Lord, Lord Hastings, described it. I must confess I have searched my vocabulary for another epithet which would be more appropriate to the Bill than "unhappy," but I have failed to find anything which would fall within the limits of ordinary Parliamentary usage. This blemish to which I refer is in fact one of the minor blemishes on the escutcheon of this Bill. In any other Bill it would be something very much more than a minor blemish, because it infringes every possible principle of fair play and there are circumstances which I think the Government must admit require attention. I have in mind the very normal position of the royalty owner who is also at the present time the owner of the surface. He is to receive a sum in compensation based upon an elaborate series of calculations, one of which is the deduction from the globular sum of the capitalised amount of expenses. The annual expenses of the royalty owner in management of his minerals is capitalised, and that is deducted as an expense from the global total.
  In the case to which I have referred—the royalty owner who is also the owner of the surface—a proportion of those expenses will be continuing. We will take the case of the royalty owner who
  746
  has let his minerals under a lease which provides for compensation by the lessee in respect of surface subsidence. Nothing will be changed in that respect by the passage of this Bill. The lessee will still be responsible for damages, and the surface owner will still be entitled to that compensation by the lessee. He will still have to take steps to cover it, he will still have to employ a solicitor, very likely a surveyor, and possibly a mining engineer. All these expenses will continue, and yet in respect of them a sum has been capitalised and deducted from the compensation which he is to receive. It is to meet that situation that I beg to move this Amendment. Without developing the matter further, I would just express the hope that the noble and learned Lord will accept it or, if not, that he will tell us in what way he proposes to meet this obvious and glaring injustice.
  Amendment moved—
  Page 74, line 41, at end insert the said new paragraph.—(Lord Balfour of Burleigh.)
  THE LORD CHANCELLOR: The suggestion I have to make to the noble Lord is that this Amendment is so bound up with the consideration of paragraphs 5 and 6, or only one of them, in the Second Schedule, which are to be found on Page 53 and 54 of the Bill, that it would almost be better to postpone consideration of it until we come to deal with these paragraphs on Report. Your Lordships will perhaps remember that I agreed there was something to be carefully considered by the Government in reference to the claim that the Commission should either pay the compensation payable to a surface owner whose land was let down, or should at any rate stand behind the lessee in regard to any such claim. That is the same thing in effect. The question arose of whether that liability, whether it be a liability of the lessee alone or of the lessee and the Commission, was to be determined by action in the Courts or by arbitration. One or the other must be the case, and the consideration which I have to put before the noble Lord is this.
  Supposing there is a man who says he has suffered damage to the extent of £100 in respect of cracks that have been occasioned, let us say, to the wall of his house. What happens in real life is this. The person who is liable to pay, and who does not want to have an expensive

  747
  litigation about nothing at all, when he hears there is £100 claimed, sends his surveyor to look at the damage. He is advised in all probability that £50 would cover it, and he either pays £50 into Court, if it is an action in the County Court or the High Court, or, if it is a matter sent to an arbitrator, he makes an unconditional offer to the claimant to pay him £50 and tenders that amount to the claimant. He offers also to pay the costs up to date, whatever they may be. If he has paid money into the County Court it automatically covers costs up to date if the offer is accepted. That is a normal case, and I am quite sure the noble Lord, though it is true he uses the words "reasonably incurred," does not wish that the Commission should pay costs incurred by a person after the vesting date in connection with a claim for compensation where he has received an offer which turns out to be ample to satisfy his proper claim.
  Something in the drafting of this paragraph will depend upon the course which the Commission think fit to take in reference to paragraph 5 on Page 53 of the Bill. It will be perhaps in a different form if it is an arbitration to that which it will follow if the matter has got to go to the Court. If the House imposes upon the Coal Commission an obligation to pay damages or compensation in respect of any injuries done by a lessee who gets his lease from the Coal Commission, it will necessarily follow that all reasonable costs incurred, except in regard to such cases as I have mentioned, will have naturally to be paid by the Coal Commission. If you make a man a debtor and he does not pay what is lawfully due, and proceedings, whether in the nature of an action or an arbitration follow, the prudent plaintiff or claimant gets his costs unless he has acted in such a way as to deprive himself of them by not accepting a proper offer or not accepting a proper payment into Court. That I think must follow. In other words that rather long sentence is simply meant to say that if the House imposes upon the Coal Commission an obligation to pay compensation, the provision as to costs follows, except it may be as regards some verbal phrase which will depend rather on the nature of the case. In these circumstances I suggest to the noble
  748
  Lord that, though this is a matter that is likely to be dealt with, it is dependent so much on the obligation placed on the Commision that at the moment it is impossible to deal with it effectively.
  LORD HASTINGS: It occurs to me that the Lord Chancellor has carried his mind rather further ahead than the date which was in the mind of my noble friend Lord Balfour of Burleigh. He referred on more than one occasion to where the Commission have given a lease to a lessee. What was in Lord Balfour's mind, and certainly in mine, is the case of a lessee of the present lessor who, of course, if still bound by the terms of that lease to the surface owner. The surface owner is not going to be unfair. These leases are not going to be brought to an end. Royalty rent is going to be paid to the Commission in future and not to the owner of the surface who was, up to the vesting date, the owner of the minerals; but if there is any compensation payable it will be under the lease which the mineral owner has given to the existing lessee. If that existing lessee is contumacious and not found to be agreeable to the payment of reasonable compensation, it is not a question of inducing the Commission to pay the compensation or inducing the Commission to compel the lessee to pay the compensation. The surface owner is the person who is bound to force the lessee to pay the compensation, and it will cost him money.
  As Lord Balfour has pointed put, hitherto these expenses have come out of his normal expenses of management which have been capitalised and deducted, and therefore there is nothing out of which he can meet these managerial expenses which are normal to the management of mineral estates. Lord Balfour's Amendment suggests, not that the Commission shall be in any way responsible for the payment of compensation, not that there should be any interference between the Commission and their lessees when they have lessees, but that the Commission shall be responsible for paying the costs of the surface owner in recovering damages from the lessee who, up to the vesting date, was his own lessee and continues under that lease to be responsible to him for letting down his surface. I think the situation is one which is more narrow than that visualised by the noble and learned Lord, and I beg to support my noble friend Lord Balfour.
  LORD BALFOUR OF BURLEIGH: Before the Lord Chairman puts the Question I think the noble and learned Lord was going to say something.
  THE LORD CHANCELLOR: If your Lordships will allow me, I was going to say that as I understand the Amendment it applies not only to paragraph 5 on page 53 but also to paragraph 6 on page 54. I must admit I did not fully appreciate what the noble Lord, Lord Hastings, says with regard to the cost as it applies to paragraph 5 alone, but as it stands it does apply to both cases. Now with regard to paragraph 6 it is plain that we have not yet finally determined what the position of the Coal Commission is to be, but if we take it only as applying to paragraph 5—that is to say, as applying to existing leases—I must state frankly that at present I cannot agree that the Commission shall in all cases pay the costs which have been occasioned by the improper conduct of a lessee to whom the Coal Commission have not granted a lease, and with regard to whom they have no right of telling the lessee what he has to do.
  As Lord Hastings has pointed out, the Commission cannot affect an existing lease. The lessee can snap his fingers at the Commission, providing he complies with the clauses in his lease and pays the rent thereby reserved. Would it be just or equitable to impose upon the Commission an obligation to pay costs incurred by a lessee who, contrary to the wishes of the Commission, chooses not to comply with the terms of his lease, and not therefore to make the compensation which the terms of his lease require him to make? That would be wholly wrong and unjust. It is for that reason that if this Amendment as it stands is confined to paragraph 5, so to speak, or a claim for compensation to which he may be entitled under the provision of paragraph 5, I confess that I am unable to consent to it. It must be wrong in that form not only because the Commission have nothing in the world to do with it, but also for the reason that I have mentioned, that the refusal of the surface owner may be an unreasonable refusal, and it may involve payments by the Commission for costs although, in fact, the surface owner has brought an action under which he has recovered less than he has been offered or in which, for all I know, it may be that he has recovered nothing at all. I
  750
  have known cases of claims for subsidence where the whole action has been dismissed with costs.
  Your Lordships will remember that in an action for subsidence you have to prove that the defendant has occasioned the damage. In this House quite a short time ago we had an action in which a claim was made for subsidence and it was dismissed. It came from the Court of Session in Scotland, and they had dismissed it because there was nothing really due to subsidence in the case at all. But whether because the claim fails—and as drafted the Amendment means any claim for compensation—or because it is a claim which ought not to entitle the surface owner to costs because he has refused an offer which was made to him, or because—which is more important still as regards paragraph 5—the Commission have had nothing whatever to do with the liability of the surface owner, and nothing whatever to do with the refusal of the tenant to pay what he ought to have paid—for all those reasons together the Amendment is one which cannot, as I submit, be accepted, though when we have decided what the liability of the Commission may be at a later date it may then be that some such paragraph will be of use.
  VISCOUNT RIDLEY: This paragraph seems to me to refer to the normal expenses of management which recur every year, and is not necessarily connected with misbehaviour on the part of the lessee in any shape or form. This is a normal thing under a lease and occurs almost every year. A farm tenant will apply to the lessee for surface damage, and he will always have a reasonable claim adjusted by the machinery which at present exists. There is not in a case of that sort any necessity for arbitration or for any of the two methods suggested as a part of the machinery proposed. The management expenses in this connection consist, not of expenses of going to law to enforce a claim, but of the normal process of having the damage surveyed by an expert, who will state to what extent the damage could be said to be caused by the particular form of working which is going on underneath the property, and the expenses of a surveyor who has to estimate the cost that would be necessary to put the land back to its proper agricultural condition.

  751
  I may be reading this Amendment quite wrongly, but it seems to me what is suggested is this. Expenses of management include the sort of things I have suggested and also another kind of expense which is more a question of the letting of leases and negotiations with coalowners. That class of expense of management will cease, but expense which entails a day-to-day adjustment of matters as between the surface owner and the lessee will continue; yet a deduction has been made from the amount to be paid to the royalty owners of over 4 per cent., which was said to represent, and I think did represent, the total expenditure on all accounts for management expenses. It therefore remains that that part of the management expenses continues, although a deduction of payment is being made in respect of it. It seems to me in that case, if I have read this Amendment aright, it is nothing but reasonable. If in fact the expenses continue and a deduction has been made for them, it is surely only reasonable that an adjustment should be made. The Coal Commission have taken on the responsibility of paying this sum for the royalties, less deductions for management expenses, and it seems to me, therefore, that they should have some liability on account of those expenses. I think the Amendment is an eminently reasonable one.
  LORD CROMWELL: I think the words that have fallen from the learned Lord Chancellor have only accentuated the grave trouble that will arise through the severance of the coal from the surface. I was very surprised to learn, although no doubt it is true, that the Commission are in no way responsible. They have taken over the rents, they have taken over the money which was spent in managing the property, and they in their turn, having taken over all the assets, are not prepared to take over any of the liabilities. It seems to me also strange that, having taken away all the money by capitalising managerial expenses from the original owner of the coal, he should be left to carry on, with a reduced staff perhaps, but with a staff of some sort, to keep in touch with what is going on underneath. There was a very outstanding statement made earlier in the debate, that in fact the surface owner would not be in a position to know, and was not now
  752
  in a position to know, what was going on underneath. Anybody with any knowledge of the coal industry would know that that is absurd. He obviously at the moment knows to the very inch on the map where the coal face is reached, and to know that he employs an expert surveyor. He will still have to go on employing some staff to keep himself in touch with whatever damage occurs. He must be in a position to know how that damage was likely to have been caused. I think that this Amendment is very reasonable and that it should be pressed to a Division.
  THE LORD CHANCELLOR: I think I have been misunderstood. It may be my fault, and that I have not said something sufficiently clearly. In order that I should not be further misunderstood let me say that the Coal Commission are going to stand after the vesting date in the position that is now occupied by the coalowners, the landlords of the existing leases. I have not said, I hope—at any rate, if I did I did not intend to say—that they would not be liable to everything to which the present owners are liable in respect of leases. As landlords they must perform all their obligations as landlords. But this Amendment seeks to put upon the Commission as landlords an obligation which at present rests with the tenants—the existing tenants I am speaking of. These tenants are entitled to do what they think fit under a lease so long as they adhere to the terms of it.
  LORD BALFOUR OF BURLEIGH: No doubt owing to my failure to explain the point the noble and learned Lord still does not appreciate what I am trying to do. This Amendment does apply to existing leases. The noble and learned Lord says that after the vesting date the Coal Commission are going to stand in the shoes of the royalty owners. They are not going to do so in this case, and I am trying to explain why. They are not going to own the surface. They are going to own the coal. The royalty owner is still going to own the surface. The noble and learned Lord said it was unjust to put any expense in this matter on the Commission because they would not have had anything to do with the lease. It is not unjust; it is the essence of fairness. The expense has been deducted from the global compensation and the Coal Commission are therefore paying less than

  753
  they would have paid had that deduction not been made.
  The former royalty owner—in future the surface owner—is going to have a continuing expense. A deduction has been made from what the Coal Commission are to pay. Therefore the surface owner is going to have to pay twice. He must have his agent, solicitor, surveyor and mining engineer to pay, although he has already paid to the Coal Commission—by deduction from the sum he received—for this very expense. I submit that the logic of that is unanswerable. I think it a great pity that the Government cannot say at once that there is a case and that they will meet it. The noble and learned Lord talks about new leases. This deals with existing leases. The case is clear. I appeal to your Lordships to show that sense of fairness which you have hitherto shown, and in the absence of getting satisfaction I must press this Amendment to a Division.
  VISCOUNT HORNE OF SLAMANNAN: May I venture to say one word? I think that the noble Lord has put forward an irresistible argument for making the Coal Commission liable for damage done by a lessee of the coal if the Coal Commission had been in the position of a person to whom the coal had been transferred, say by purchase, where he naturally took the liabilities of the person who previously owned the coal. But the Commission are to take over the coal in totally other circumstances, in circumstances in which a certain amount is being paid to the person who previously owned the coal under deduction of expenses which he in the ordinary course incurred. These expenses were kept alive, so that the result is that the amount he received by way of compensation is less by the amount of the expenses which it was assumed were coming to an end. That was the assumption. But the expenses do not come to an end. The fact is that if you make him pay these expenses which the noble Lord's Amendment seeks to get rid of, he is really paying those expenses twice over. Whoever ought to pay these expenses it cannot be right that this unfortunate royalty owner, who has already paid them in capitalised form, should be compelled to pay them again. I think the Government must find some way of meeting that obligation, whether it is by the Coal Commission paying or by some other body paying.
  754
  May I add this consideration? Under paragraph 5 it seems to me the argument which I have ventured to urge is applicable, but under paragraph 6, where my noble and learned friend the Lord Chancellor has suggested that the obligation for payment of expenses would fall in case of dispute upon the Coal Commission automatically, I think it is possible that there are some expenses which would fall outside what would be awarded by a Court or an arbitrator—for example, the kind of expenses to which the noble Viscount, Lord Ridley, referred—namely, the expenses of a surveyor who goes into the matter. There may never be any dispute at all, but this expense of the surveyor will have been incurred. Again, as I am sure my noble and learned friend the Lord Chancellor knows very well, in a great many cases of dispute, the complainant is compelled to meet expenses which are not allowed in the end by the arbitrator, or perhaps he only gets a portion of them. These are expenses which are ordinarily incurred, and which I am certain went into the figure of deduction by which the global sum was lessened. I hope the Government will take some means of putting the matter right, because it does seem that it would be an act of great injustice to impose these expenses upon a person who has in fact, by their deduction from the global sum, already paid them.
  THE LORD CHANCELLOR: I must express my regret that in the remarks I made on this Amendment I appear not fully to have understood the object of the Amendment. I confess that I thought it was mainly to do with the costs of litigation or of an arbitration which was undertaken by, for instance, a surface owner as against the lessee, being a lessee over whom the Coal Commission have no control. It was not until the noble Lord, Lord Balfour of Burleigh, made his last observations that it became apparent to me that there was something else which was involved which I had not fully understood. I had not appreciated that this question referred to expenses reasonably incurred by a person after the vesting date in connection with a claim to compensation. What I thought was being dealt with was the cost of an actual proceeding in the nature of litigation, as regards which I had a somewhat different view from that of Lord Balfour, as I understand it, and one which I have

  755
  already endeavoured to express. But with regard to the question of these expenses, as the noble Lord has said and as the noble Viscount, Lord Horne, has repeated, I think there is something to be considered by the Government, and as our object is to be perfectly fair, and as it cannot be right to let anybody pay anything twice over, I should be very glad on behalf of the Government to consider that. But I ought frankly to say that it does not mean that the whole of this Amendment as it stands will probably be accepted by the Government. I think the matter will require some further Amendment. All I can say is that the point that Lord Balfour and Lord Horn have mentioned in regard to the expenses, which have already been included, in a sense, in the global sum, or rather, have been reflected in the global sum, will be very carefully dealt with by the advisers of the Government, and we shall endeavour to meet that point on the Report stage.
  LORD BALFOUR OF BURLEIGH: am much obliged to the noble and learned Lord, and I think, in view of what he has been so kind as to say, that the most convenient course to your Lordships will be to put the Amendment into the Bill now, and then the onus will be on the Government to find their Amendment and not on me. It has been admitted, after considerable argument, that there is something in our case, which they would not admit for a very long time. So I suggest that the Committee should agree with the Amendment, and that then the Government should introduce their Amendment on the Report stage.
  EARL STANHOPE: The Government are quite unable to accept my noble friend's suggestion. The normal arrangement, commonly made, is that the Government make an offer to reconsider before Report and then, if the mover does not accept that suggestion, he presses the Amendment. If he wins, he takes the chance of its remaining in the Bill. If he loses, the Government's offer drops.
  LORD BALFOUR OF BURLEIGH: Does the noble Earl mean to say that, if these precise words were not accepted now, he would be a party to enshrining in the Bill what is admitted to be a patent injustice?
  On Question, Amendment negatived.
  Third Schedule, as amended, agreed to.
  Fourth Schedule:

FOURTH SCHEDULE.
Procedure for separation of vested and non-vested premises that are demised together by a subsisting lease.
2.—(1) A person to whom a copy of a draft has been delivered under the preceding paragraph may within six weeks after the delivery thereof serve notice on the Commission of his objection to the terms thereof on the ground that the proposed substituted lease does not comply with the provisions of Section ten of this Act, or that the proposed substituted security or other instrument does not comply with the provisions of the preceding paragraph, as the case may be, and where notice is so served the terms of the draft may be modified by agreement between the parties concerned, and in default of agreement the terms thereof shall be settled by an arbitrator selected by agreement between the parties or, in default of agreement, by the Board of Trade.
LORD TEYNHAM LORD TEYNHAM moved, in subparagraph (1) of paragraph 2, to leave out "Board of Trade" and insert "Lord Chancellor in the case of England and the Lord President of the Court of Session in the case of Scotland." The noble Lord said: I move this Amendment on behalf of my noble friend Lord Gain-ford. For the convenience of your Lordships I might suggest that the further Amendments, one in the Fifth Schedule, page 82, line 36, and one manuscript Amendment in the Sixth Schedule, page 85, line 19, might be discussed together. The purpose of these Amendments is to relieve the Board of Trade of their obligation to appoint an arbitrator. As the Board of Trade can give general directions to the Coal Commission, it would seem more appropriate for the appointment of an arbitrator to be made by an independent authority, as is set down by the Amendment standing in my name. I beg to move.
Amendment moved—
Page 79, line 36, leave out ("Board of Trade") and insert ("Lord Chancellor in the case of England and the Lord President of the Court of Session in the case of Scotland.")—(Lord Teynham.)
THE LORD CHANCELLOR: The Amendment at the bottom of page 8 will, I think, drop, because the Fourth Schedule is bound to drop. Its omission has not yet been moved, but it cannot

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help going out, having regard to the previous Amendments accepted by the Committee. But the similar Amendment to page 82, line 36, in the Fifth Schedule, will be in order.
THE EARL OF DUDLEY: If I might interrupt the noble and learned Lord, there is another manuscript Amendment to the same effect standing in my name, which applies to page 85, line 19, in the Sixth Schedule. The principle is exactly the same, and I should be willing that it should be taken at the same time.
THE LORD CHANCELLOR: Let that be taken, too.
THE LORD CHAIRMAN: I beg the noble and learned Lord's pardon, but that Amendment has not been handed to me.
THE LORD CHANCELLOR: I have not seen it either, but that does not matter; I can follow it.
THE EARL OF DUDLEY: I handed it in.
THE LORD CHANCELLOR: It would seem a matter of no great importance whether one more burden is placed upon the unhappy shoulders of the Lord Chancellor for the time! What I have to submit to your Lordships is that the appointment of an arbitrator, unlike the appointment of a judicial officer of any kind, is an appointment with which, prima facie, the Lord Chancellor is not usually concerned. If it were a question of any sort of judicial officer, it should no doubt go to the Lord Chancellor, but if it is the appointment of somebody who is not a person of that kind, it is thought better, on behalf of the Government, that such a matter should go to the Board of Trade as a proper body to determine the question who the arbitrator should be, and as one which is more likely to be able to do that with success than the Lord Chancellor. As I have said, it is not a matter of great importance, but if the Committee do not agree with me I shall—with a groan!—accept the obligation that is placed upon me. I venture to think, however, that it is not really right and that the Board of Trade is the proper tribunal, or body, to exercise this function.
THE EARL OF DUDLEY: I very much nope that the noble and learned Lord will undertake this responsibility, together with the Lord President of the Court of
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Session in the case of Scotland. I feel quite certain that it would give a great deal of added confidence m these cases where agreement fails. There is an idea, and the idea, indeed, is not without precedent, that the Board of Trade are apt to appoint a solicitor of their own and not an independent person. I can see no objection from the Government's point of view to the Lord Chancellor, if he is willing to do so, accepting this responsibility instead of the Board of Trade, and I am perfectly certain that it would give a far greater measure of confidence to those whose affairs have to be arbitrated upon in a case of dispute.
EARL STANHOPE: Does the noble Lord move? The Schedule has gone.
LORD TEYNHAM: I understand that the Schedule has gone, so I do not move the Amendment.
THE LORD CHANCELLOR: It has not gone, but it is going in one minute!
THE LORD CHAIRMAN: I asked the noble Lord, and he said he did move.
LORD TEYNHAM: I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
THE LORD CHANCELLOR: I beg to move to leave out the Fourth Schedule. This Schedule necessarily drops out and disappears, because the clause which provided for the Fourth Schedule has already been taken out of the Bill. I beg to move.
Amendment moved—
Leave out the Fourth Schedule.—(The Lord Chancellor.)
On Question, Amendment agreed to.
Fifth Schedule:

FIFTH SCHEDULE.
Lease Consolidation Schemes.
1.—(1) A lease consolidation scheme, and the single lease to be granted pursuant thereto, shall be prepared by the Commission in agreement with the working lessee.
(3) The said lease shall not (except with his consent) impose upon any person any liability not being a liability to which he would have been subject by virtue of a subsisting working lease, or render more onerous whether as regards extent, duration, terms, conditions or otherwise, any liability to which any person would have been so subject.
3. The Commission shall further prepare in connection with a tease consolidation scheme a draft substituted lease, being such a substituted lease as the Commission are authorised to prepare under Section ten of this Act, of the premises comprised in each of the subsisting working leases other than the premises that are to be comprised in the single lease to be granted pursuant to the scheme.
6.—(1) The standard amount of rent in respect of any reversion may be determined by agreement between the Commission and the person for the time being entitled to recover the rent attributable to that reversion, or in default of agreement either the Commission or that person may refer it for determination to an arbitrator selected by agreement between them, or in default of agreement, by the Board of Trade.
9. Copies of a draft substituted lease prepared by the Commission in connection with a lease consolidation scheme under paragraph 3 of this Schedule shall be delivered in like manner as copies of draft substituted leases are required to be delivered under the Fourth Schedule to this Act and the provisions of that Schedule shall have effect as if the draft had been a draft prepared for the purposes of Section ten of this Act, subject to the modification that for the references therein to the vesting date there should be substituted references to the date of the taking effect of the scheme.
11. The costs reasonably incurred in giving effect to the provisions of this Schedule by any person other than the Commission or the working lessee shall be paid by the Commission, and sub-paragraphs (2) and (3) of paragraph 5 of the Fourth Schedule to this Act shall have effect in relation to such costs.
LORD BINGLEY LORD BINGLEY moved to add to sub-paragraph (3) of paragraph 1 "or deprive him of the benefit of any covenant condition or provision of the subsisting working lease affecting or relating to any premises other than coal." The noble Lord said: The Amendment standing in my name was, I understand, moved in another place, as an addition to sub-paragraph (3). That sub-paragraph aims at securing that no liability shall be imposed which is not already existing, and this is merely a suggestion securing that any benefit shall remain which a person already is receiving. It is a small matter, and I understand that the Attorney-General in another place agreed that the point should be discussed and considered. I would therefore like the noble and learned Lord to tell us whether the Government are prepared to accept the Amendment now.
Amendment moved—
Page 81, line 26, at end insert the said words.—(Lord Bingley.)
EARL STANHOPE: The Government are prepared to accept this Amendment, if my noble friend will move it with additional words, so that it will conclude with the words "relating to any premises other than coal or a mine of coal."
THE EARL OF DUDLEY: Will the noble Lord explain the object of this addition?
THE LORD CHANCELLOR: All through the Bill we have used the phrase "coal or mine of coal," because there may be cases where there is a hole or passage in the ground which has not any coal at all in it, but is part of a mine. If the phrase be used throughout, if this Amendment is accepted we had better include the words here.
LORD BINGLEY: I will withdraw the Amendment in order to move it in the form suggested.
Amendment, by leave, withdrawn.
Amendment moved—
Page 81, line 26, at end insert ("or deprive him of the benefit of any covenant condition or provision of the subsisting working lease affecting or relating to any premises other than coal or a mine of coal.—(Lord Bingley.)
On Question, Amendment agreed to.
THE LORD CHANCELLOR THE LORD CHANCELLOR moved, to leave out paragraph 3. The noble and learned Lord said: This is consequential. The paragraph is unnecessary, having regard to alterations which have been agreed to.
Amendment moved—
Page 82, line 1, leave out paragraph 3.—(The Lord Chancellor.)
On Question, Amendment agreed to.
LORD TEYNHAM LORD TEYNHAM moved, in sub-paragraph (1) of paragraph 6, to leave out "Board of Trade" and insert "Lord Chancellor in the case of England and the Lord President of the Court of Session in the case of Scotland." The noble Lord said: This is the same Amendment as was moved previously, with regard to the appointment of an arbitrator by the Board of Trade.
Amendment moved—
Page 82, line 36, leave out ("Board of Trade") and insert the said new words.—(Lord Teynham.)
THE LORD CHANCELLOR: If I thought there was any general desire on the part of the House that the Lord Chancellor—not myself but perhaps some future Lord Chancellor—should undertake this duty, I should consent at once, but I am not quite sure that your Lordships realty want that, or why the President of the Board of Trade should not be an excellent person to perform this duty. If without a Division I can find out what it is your Lordships want I shall comply.
THE EARL OF DUDLEY: Would the noble and learned Lord reply to the point I put, that this is only to prevent the Board of Trade from appointing their own solicitor?
THE LORD CHANCELLOR: I think it is so unlikely.
THE EARL OF DUDLEY: I understand there is a precedent for that, and there is nothing in the clause which would ensure that the arbitrator was an independent person.
LORD CROMWELL: I should have thought that the Board of Trade would be an interested party because they have to issue instructions to the Commission.
THE EARL OF DUDLEY: The Board of Trade have already given instructions to the Commission, and it seems illogical that they should also appoint the arbitrator.
THE LORD CHANCELLOR: In those circumstances let me say at once that the Government accept the Amendment.
On Question, Amendment agreed to.
THE LORD CHANCELLOR THE LORD CHANCELLOR moved to leave out paragraph 9 and insert:
"(3) The provisions of Section ten of this Act shall have effect in relation to a severance effected by the determination of a subsisting working lease under the last preceding sub-paragraph as regards a part of the premises comprised therein, as they have effect in relation to such a severance as is mentioned in that section of the reversion on a lease subsisting on the vesting date, so however that the apportionment of the rent reserved by the subsisting working lease shall be made on the basis of the apportionment made for the purpose of the determination under this Schedule of the standard amount of rent."
The noble and learned Lord said: This is consequential on Clause 10. As your Lordships know, there was an elaborate alteration of Clause 10 to provide for a severance without the necessity for separate leases, where there was a
762
separation of vested and non-vested premises demised by an existing lease. These provisions simply provide for carrying out that arrangement.
Amendment moved—
Page 83, line 17, leave out paragraph 9 and insert the said new paragraph.—(The Lord Chancellor.)
On Question, Amendment agreed to.
THE LORD CHANCELLOR THE LORD CHANCELLOR moved, in paragraph 11, to leave out all words after "paid by the Commission" and insert:
"under and subject to the provisions of this paragraph:
Provided that, in relation to costs payable by virtue of sub-paragraph (3) of paragraph 8 of this Schedule, the provisions of Section ten of this Act shall have effect to the exclusion of the provisions of this paragraph.
(2) In case of difference as to the amount of the costs, other than costs of a reference or award, to be paid under this paragraph, the Board of Trade may direct in what manner they are to be taxed.
(3) An arbitrator may direct that the Commission shall not be liable to pay any such costs as aforesaid, being costs of a reference or award incurred by a party to a reference who appears to the arbitrator to have been guilty of any such unreasonable failure to agree with the Commission or any other party, or of any such negligence or default, as to disentitle him to payment thereof."
The noble and learned Lord said: This is purely consequential on what has already been done.
Amendment moved—
Page 84, line 21, leave out from ("Commission") to end of the Schedule and insert the said new words.—(The Lord Chancellor.)
On Question, Amendment agreed to.
Fifth Schedule, as amended, agreed to.
Sixth Schedule [Grant of leases to freeholders in possession of coal immediately before the vesting date]:
LORD TEYNHAM: The Amendment which I move in paragraph 3 is in conformity with what we have done on the last Schedule.
Amendment moved—
Page 85, line 19, leave out ("Board of Trade") and insert ("Lord Chancellor in the case of England and the Lord President of the Court of Session in the case of Scotland").—(Lord Teynham.)
On Question, Amendment agreed to.
THE LORD CHANCELLOR: The Amendment in my name is purely consequential.
Amendment moved—
Page 85, line 32, leave out ("5 of the Fourth") and insert ("11 of the Fifth").—(The Lord Chancellor.)
On Question, Amendment agreed to.
Sixth Schedule, as amended, agreed to.
Seventh schedule:

SEVENTH SCHEDULE.
AMENDMENTS OF 20 & 21 GEO. 5. c. 34, s. 13.
1. In Section thirteen, after subsection (1) thereof, there shall be inserted the following subsection:
"(1A) The following provisions shall have effect with respect to any scheme submitted to the Board of Trade by the Coal Commission—

(a) the scheme shall provide for the consideration to be given to each of the constituent companies from which property is to be transferred (hereinafter referred to as a transferor company), being given out of the securities of the new company or of the constituent company to which that property is transferred, as the case may be (hereinafter referred to as the transferee company) and not otherwise, and for the amount of the consideration being determined upon the basis of the value at the date of transfer of the property and liabilities of each transferor company transferred by the scheme; the value of the property being assessed at what would have been the value thereof at the date of transfer as between a willing buyer and a willing seller;

(b) the scheme shall determine the classes of securities of the transferee company which are to be given to the transferor companies in respect of the different classes of property transferred to it, and shall make provision for the determination of the amount of the consideration to be given to each of the transferor companies out of those securities, in so far as it is not determined by the terms of the scheme, being finally determined upon principles specified therein, by arbitration or otherwise, after the scheme has come into operation;

2. For subsection (2) of the said Section thirteen there shall be substituted the following subsection:
"(2) In relation to any scheme submitted to the Board of Trade under this section by the Coal Commission, the Act of 1926 shall have effect as if for the proviso to subsection (2) of Section seven thereof and Section eight thereof (which both relate to the consideration of schemes by the Railway and Canal Commission) there were substituted the following proviso, that is to say:
Provided that the Railway and Canal Commission—

(a) shall hear such persons, whether in support of or against the scheme, as they think fit, including representatives of persons employed in any undertakings affected by the scheme; and

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(b) shall not have power to make, or require to be made, in the scheme modifications inconsistent with any provisions required by the enactments relating thereto to be included in schemes submitted to the Board of Trade by the Coal Commission but subject as aforesaid may make such modifications, if any, as they consider necessary for enabling the amalgamation or absorption affected by the scheme to be carried out upon terms and conditions that are fair and equitable to all persons affected by the scheme, and are calculated to avoid' financial injury to any of the constituent companies and to enable the undertaking of the transferee company to be efficiently carried on; and

LORD TEYNHAM LORD TEYNHAM moved to leave out "and not otherwise" in paragraph (a) in the substituted subsection (1A) in paragraph 1. The noble Lord said: I beg to move this Amendment on behalf of Lord Gainford. With regard to it I would suggest that the further Amendments which stand in my name, page 86, lines 4 and 20, and page 87, lines 20 and 21, might be discussed together. These Amendments are intended to make provision whereby in suitable cases of amalgamation the expropriation of the undertaking may partly or wholly be compensated by a cash payment. The Amendment would have the effect of restoring the power of the Railway and Canal Commission under the Acts of 1926 and 1930, by which under Section 7, subsection (2) of the 1926 Act the Railway and Canal Commission were given power in cases of amalgamation where they considered it fair, and not otherwise, to order that compensation should be paid in cash. I would suggest that it is very desirable that this present power of the Railway and Canal Commission in this respect should not be interfered with. In connection with amalgamation cases there will obviously arise many in which shares in the transferee company cannot provide proper compensation, but if the words "and not otherwise" are allowed to remain in the Bill both the Coal Commission and the Railway and Canal Commission will be precluded from providing for cash compensation, even though there may be no difficulty in finding the cash.
In another place the Minister for Mines has stated that in the case of any particular scheme going before the Railway and Canal Commission, if they come to the conclusion on the facts that unless cash was paid in a particular case it

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would be unfair, clearly they must reject the scheme. It would seem, as the Bill stands, that the Coal Commission are in the unfortunate position that if they produce a scheme of amalgamation which the Railway and Canal Commission decide is inequitable except by cash compensation, they would have no power to proceed any further with the scheme, as they are prohibited from sanctioning a scheme unless it is fair and equitable, so that, while the scheme itself might be a sound one, it would thereby be jeopardised. It is quite clear that cases of amalgamation will arise in which it is proposed to add one or two small undertakings to a larger one, and the larger one would prefer in some cases to pay out the small ones in cash, rather than have to issue shares and possibly have to contemplate a reconstruction of the company. It has been argued in another place that this Amendment might have the effect of forcing a transferor company out of the industry, but my Amendments merely make provision for the Railway and Canal Commission to determine the method of compensation which they consider would be fair and equitable.
Amendment moved—
Page 86, lines 4 and 5, leave out ("and not otherwise.")—(Lord Teynham.)
EAKL STANHOPE: This raises the whole question of the arrangement under compulsory amalgamation, and I am very glad that my noble; friend has suggested that we should have a discussion on the whole situation. The matter was discussed in another place, and it was pointed out that there were considerable difficulties if compensation could be paid in cash. In the first place there was the case where a company has unwillingly to be swallowed up and wishes to remain in the industry. Obviously it would be unfair that perhaps bigger companies should compel it to take cash instead of taking shares and continue in its management of its part of that combined industry. Then there is the other case, where a company might desire to be paid out in cash and might go to the other companies saying, "We desire to have cash." That might cause great difficulties. It might be that none of the other companies had liquid cash available. If it was cash set aside for working expenditure it would cripple them if they had to pay over part of that work-
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ing capital when the amalgamation took place. In other cases it might be necessary for them to go to the public and raise money. Could anything be more difficult than to go to the public and ask them to subscribe capital to put into an amalgamation company if some of the constituent companies themselves refused to go into it and receive shares? Obviously if you went to the market then and said, "Here are certain companies which refuse to go into this amalgamation, but we ask you to come into it as a suitable investment," you would be very unlikely to get the money you required.
For all these reasons the Government felt that the only way really in which amalgamations could proceed would be by each of the constituent companies being asked to take stock in the new company, and not receive cash. I need hardly point out that where an amalgamation is proposed and a company say, "Well, if you pay us out in cash we agree," that would cease to be a compulsory amalgamation, and would simply proceed as a voluntary amalgamation, in which the various constituent parts could make their own arrangements among themselves without any difficulty whatever. Our feeling was that it was partly because this was one of the things that was necessary under the 1930 Act that compulsory amalgamations have been so few and so far between. It was found a crippling condition under that Act, and that was one of the reasons why we did not wish to continue it in this Bill.
VISCOUNT RIDLEY: The noble Earl, the Leader of the House, has put the case very much more clearly than it was put in another place. Reading the Report of the debate there I could find no reason whatever for the Government's position, except that the matter could be put right by the Railway and Canal Commissioners. But in fact it seems that the only power they have is simply to refuse to sanction any scheme if in their opinion it would cause financial injury to any constituent party. The point to my mind is that what is suggested in this Amendment is not that any of the companies which are to be formed into the amalgamated company are to have the right to ask for cash, or part cash and part shares, or that any of the other companies are to have the right to insist that one of the companies

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should be given part cash, but simply that the Commissioners are empowered, in a case where it is found reasonable and necessary, to suggest that it should be partly on a cash basis. That, to my mind, could never be done if it did in fact involve the necessity of the new company having to go into the market to obtain money. Nor could it be done in a case where one of the companies was a small company which did not want to be swallowed up. I am rather at a loss to know why this provision should be left out when it was inserted in the 1930 Act. I have not really heard of any reason which has caused a change in the situation. I do not think that under the 1930 Act any amalgamations have taken place where the provision of cash has been necessary, but it seems eminently fair and reasonable that under certain circumstances that should be possible.
THE EARL OF DUDLEY: The noble Earl says quite rightly that a case might arise where a company was paid out in cash which wished to carry on in the new amalgamated company and it would be an unfair burden upon it not to be allowed so to do. That is quite true. But on the other hand a case might easily arise when it is almost impossible, without imposing great unfairness on it, not to pay it out in cash. A case might arise where the Railway and Canal Commission would have to turn the whole scheme down unless a company were paid out in cash. I feel that there ought to be some provision if necessary for either paying the company out in cash or partly in cash and partly in securities. A case might arise such as this. You might have as a party to an amalgamation scheme a company whose shares were very much more valuable than the shares of the company with which it was proposed it should be amalgamated. Its shares might have been paying a dividend for some years past, and the shares of the company with which it was to be amalgamated had not been paying a dividend. It is possible that the shares of the company with which it was proposed that it should be amalgamated might be worth a quarter or a half what its own shares were worth on the Stock Exchange. In a case of that sort it might be impossible to amalgamate such a company on a share basis without imposing great hardship on it, and perhaps the fairest and simplest
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way would be to pay it off in cash. But if a scheme of that sort were put to the Railway and Canal Commission they might have to turn it down because they had not in fact the power to make a cash payment. I do think this principle wants looking into a great deal more closely before it is finally laid down that a mining company can only be amalgamated on a share basis.
EARL STANHOPE: I do not know if my noble friend thinks that a company would necessarily have to take over exactly the same number of shares in the amalgamated company as it had in its own company. That would be done on a valuation basis, and on the date on which amalgamation goes through these shares would be valued at their price in the market on that day. Therefore, if one set of shares were valued high and the other were valued low, the compensation would be arranged accordingly. The noble Earl is quite right in saying that if injustice were being done through shares being handed over to one of those who were opposing amalgamation, the Railway and Canal Commission would have to turn the scheme down, but frankly I do not see that a payment of cash would be any fairer. If you cannot get a fair basis by handing over shares of a certain value, then probably you cannot get a fair basis by handing over a sum of money. Therefore, the Railway and Canal Commission as the Court concerned would have no alternative but to say: "This is unfair to some of those involved in the amalgamation and therefore we must inevitably turn down the scheme as not being fair to everyone concerned." I do not think that the distinction between stock and cash in that case would make any difference.
THE EARL OF DUDLEY: I do not know that the noble Earl has explained the objection to bringing in the alternative, which I understand was an alternative before, of paying out an individual company in cash if that were found necessary. The noble Earl has admitted that the Railway and Canal Commission might have to turn down a good and reasonable scheme because they did not think it fair to pay off a company in cash in cases where it might be simpler to do so, and I do not quite see the objection to that principle if it were in the Bill before.
EARL STANHOPE: The real objection is that one or other of the parties would object. Either the people being paid in cash would object to taking cash, or the people on the other side would object to paying cash because it might cripple their resources and put the amalgamated company in a difficult position. There is the final case in which every one agrees that cash should be paid. There is just that one case which the Government might be prepared to consider. A normal case would, I think, inevitably become voluntary amalgamation and not compulsory amalgamation, and therefore drops out of the whole of this altogether. The only case that is left is where some company is being compelled to come into the amalgamation and every one concerned would like to pay cash. That is really the only thing not covered by the Bill as it stands that possibly requires amendment. The noble Earl has made a point of that, and I should be very glad to consider that before the next stage if that is the point he is pressing.
THE EARL OF DUDLEY: That is the point I am pressing, and that is the point, I think, the movers have in mind—that extreme case.
EARL STANHOPE: All the Government are really concerned with is that cash shall not be forced on either side against their will. That is the big point as far as we are concerned.
LORD TEYNHAM: In view of that explanation, I beg leave to withdraw.
Amendment, by leave, withdrawn.
THE EARL OF LINDSAY THE EARL OF LINDSAY moved to add to paragraph (a) in the substituted subsection (1A) in the first paragraph:
"and that no scheme shall be submitted to the Board of Trade unless the Commission have certified that the values of the undertakings of the transferor companies at dates specified in the scheme have been so assessed for the purposes of the scheme."
The noble Earl said: The object of this Amendment is to ensure that the values of a transferred undertaking shall be specified in the schemes. This is subject, of course, to the necessary adjustment in respect of changes between the dates of valuation and transfer. As the Bill stands at present, a scheme need only specify the principles, which I suppose means the skeleton, of the arrangement on which
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the valuation may be left to be determined by arbitration or otherwise after a scheme has come into operation. Obviously it would be extremely difficult for a transferred company, who only know after a scheme is drawn up what they are going to get, to go to the Railway and Canal Commission and make objections. They must know exactly where they stand. As showing how important this is, it is necessary to state that very many colliery companies have large numbers of shareholders, and they will naturally be very anxious to know how they stand. They will want to know what they are getting either in the way of ordinary shares or preference shares, and it is obviously most unfair for a scheme to go through before this information is available. Owing to the habit of referring to colliery companies as the coal owners' the impression has perhaps been created that these companies have only a few shareholders, but in the case of a very great number of colliery companies there is a free market in shares on the Stock Exchange and there are a very large number of shareholders, many of whom are people of small means, and it is very necessary that these people should know where they stand.
Another reason why this Amendment should be agreeable to the Government is that it will facilitate, as they desire, amalgamations. It must not be understood that I entirely approve of amalgamations—certainly not compulsory amalgamations, and only to a modified extent voluntary amalgamations. There has been a great deal said about them. I entirely disapprove of what fell from the noble Viscount, Lord Samuel, the other evening when he stated that one of the advantages of amalgamations would be that they would facilitate selling arrangements and prevent undercutting and underselling. They cannot possibly do that because already, as things are, it is impossible for a company to sell an ounce of coal without the approval of the selling agencies set up in the various districts, so that in that respect amalgamations will be of no assistance. As far as amalgamations carried out on a voluntary principle are concerned, if fair compensation is given to those who wish to take part in them, I suppose amalgamation will be all to the good. For these reasons I beg to move.
Amendment moved—
Page 86, line 12, at end insert the said words.—(The Earl of Lindsay.)
EARL STANHOPE: We think my noble friend's Amendment is unnecessary, and if he would look at the beginning of the paragraph he will see also that the words will not do either. What it says is that "the scheme shall provide," and then, turning to his own Amendment, "no scheme shall be submitted to the Board of Trade." Obviously that does not make sense. The Railway and Canal Commission has to be satisfied that a scheme is fair and equitable as between all parties. The only way in which they can do that is by going into the details of each of these companies, seeing what value they have and what prospects they have, and drawing up a scheme and considering a proposal on these lines. My noble friend wants figures put in, and of course figures will be put in, but you cannot put in the final and definite figures until the date of the amalgamation. There is the case of the value of stocks on the market; perhaps you have to take the actual value of each of those stocks on the actual date on which the amalgamation took place, and give them a few more or a few less according to whether the price fell or rose. Someone would also have to take into consideration the amount of coal they had on the premises. You would have to take into consideration the amount of outstanding debts, whether those who bought the coal had actually paid for it and had given cash, or whether there was still an amount due to the amalgamated companies. Therefore all those final details cannot really be settled until it comes to the actual date of the amalgamation itself.
I think my noble friend will realise that the Railway and Canal Commission have put upon them the duty of seeing that all these conditions—the actual value of the stock, the coal, and the price due and so on—are taken into consideration before they can accept this scheme at all. Therefore, every one of the shareholders, large or small, will have almost an exact idea of what he will receive, but he will not have an absolute idea because these matters vary from day to day, and therefore cannot be settled until the date of the amalgamation actually arrives. I hope my noble friend will see that really he is only putting into the Bill what is already a
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duty of the Railway and Canal Commission, and that to suggest that the actual figures should be put in is really not possible because of the sliding scale which he himself suggests it will have to operate.
THE EARL OF LINDSAY: In view of what has fallen from the noble Earl I withdraw the Amendment.
Amendment, by leave, withdrawn.
LORD TEYNHAM LORD TEYNHAM moved to add to paragraph (a) in the substituted subsection (1A) in paragraph 1 "and shall provide for the purchase at a price to be fixed in default of agreement by arbitration of any undertaking considering the terms of amalgamation financially injurious." The noble Lord said: I beg to move this Amendment on behalf of my noble friend Lord Gainford. The matters dealt with in this Amendment are somewhat similar to those discussed on the last Amendment, and I suggest that this and the following Amendment on page 86, line 17, in the name of Lord Gainford and other noble Lords, should be discussed together. The objects of these Amendments are very similar to those of the last Amendment. They are to ensure that the valuations of the transferred undertakings are specified in any scheme for amalgamation. It will obviously be impossible for a transferor company to put before the Railway and Canal Commission a case to show that it will be financially interested unless the consideration which it is to receive is specified in the scheme itself when it comes before the Railway and Canal Commission. It would be very difficult for the parties concerned to argue whether their shares in the proposed new company are fair and equitable if they do not know what those shares are going to be.
As the Bill stands at present the scheme of amalgamation need only specify the principles on which the values may be left to be determined by arbitration or otherwise after the scheme has come into operation. I cannot see that there would be any practical difficulty in specifying the amount of the property and the actual consideration to be given in shares which are to be brought into the combined undertaking. It would, therefore, be unnecessary to have recourse to arbitration over this matter after the scheme has

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been confirmed by the Railway and Canal Commission. It has been argued in another place that the shares or stock to be taken over will vary from day to day, and that the amount which will actually be taken over at the time of the amalgamation may differ materially from the amount at the time the scheme was submitted; but, as suggested by the Secretary for Mines in another place, it might be possible to have some sliding scale for determining the varying elements concerned which, of course, may vary between the date of the submission of the scheme and the date on which the amalgamation actually takes place. I do not, however, think that this is any reason why it should not be possible to lay down the precise shares which are to be allocated.
Amendment moved—
Page 86, line 12, at end insert the said words.—(Lord Teynham.)
EARL STANHOPE: This is exactly the same point we have just been considering, except that it goes a little further and makes it a little more difficult. What my noble friend proposes in his Amendment is that there should be submitted to the Board of Trade the actual price that has to be paid—"shall provide for the purchase at a price to be fixed in default of agreement." That of course means absolutely definite figures. Similarly, in the case of the word "specify," that also means quite definite figures, and apart from the actual stocks and shares, as I mentioned just now, there is also the question of the coal and the amount of debts outstanding. One has to take into consideration also the question of the mine itself. It might be that between the time the scheme came up and the time of the amalgamation a fault might appear, or there may have been a fall or a fire; therefore to lay down before the amalgamation takes place exactly what price is to be paid is, I think, quite impossible.
On Question, Amendment negatived.
LORD BALFOUR OF BURLEIGH: The Amendment on page 86, line 17, to leave out "make pro vision for the determination of" and insert "specify," which has been passed over, is in my submission essential to the comprehension of the Bill. I know we have passed it because the noble Lord said it was taken with another Amendment, but if my noble
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friend the Earl of Lindsay will move it we could discuss it. It is merely a drafting Amendment, but it is a very excellent Amendment.
THE LORD CHAIRMAN: I am afraid we have already passed it.
LORD BALFOUR OF BURLEIGH LORD BALFOUR OF BURLEIGH moved, in paragraph (b) of the substituted subsection (1A), to leave out "or otherwise." The noble Lord said: I move this Amendment on behalf of my noble friend Lord Lothian. My task would have been very much easier if your Lordships had assented to the Amendment in the name of my noble friend Lord Lindsay on page 86, line 17, to leave out "make provision for the determination of" and insert "specify," because the words in the Bill are the most appalling example of Parliamentary drafting I have ever seen. I will read them to your Lordships and you will see that without the Amendment which, unfortunately, we have not made they are almost incomprehensible. Paragraph (b) says:
"the scheme shall determine the classes of securities of the transferee company which are to be given to the transferor companies in respect of the different classes of property transferred to it, and shall make provision for the determination of the amount of the consideration to be given to each of the transferor companies out of those securities, in so far as it is not determined by the terms of the scheme, being finally determined "—
How can the "determination of the amount of the consideration" be finally determined? It makes sense if you substitute the word "specify" for the words "make provision for the determination of." Then it would read—
EARL STANHOPE: On a point of order, I think my noble friend does not realise that we have already gone beyond that Amendment.
LORD BALFOUR OF BURLEIGH: I will speak to the Amendment which I have moved on behalf of my noble friend Lord Lothian. I was trying to explain that it was an error that the Amendment of the noble Earl, Lord Lindsay, to which I have referred, had not been taken, but I must not go into that. The intention of this Amendment is to leave out the words "or otherwise." The point to be determined is the amount of the securities which has to be transferred, and this section says it has to be settled by "arbitration or otherwise" after

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the scheme has come into operation. I want to omit the words "or otherwise." If it had been by arrangement or failing an arrangement by arbitration I could have understood it, but I want to ask the noble and learned Lord what the words "or otherwise" mean in this connection. I think there is something a little bit sinister about the words "or otherwise", because they suggest that if it is not to be arbitration, it is to be something else. Is that the Ogpu method we heard about earlier in our debates, or is it not? It might be quite consistent with the arrangement that the scheme might provide that the compensation should be fixed by a valuer appointed by the Coal Commission. If that were the case, of course justice would not necessarily be done. It is because I think it ought to be by arbitration and not "or otherwise" that I move this Amendment.
Amendment moved—
Page 86, line 23, leave out ("or otherwise").—(Lord Balfour of Burleigh.)
THE LORD CHANCELLOR: I am very sorry that any sinister effect has been attributed to these words. In a case with which I think all your Lordships are familiar a very sinister meaning was attributed to the words "chops and tomato sauce." It really seems on rather the same principle that a sinister motive is attributed to these words. I will say something in a minute about the suggestion that there might be a wholly improper person appointed who would in effect be an arbitrator but would be himself interested in the matter. The words "or otherwise" are intended to cover, so far as I know, only two things which really are not very difficult to understand. One possibility is that the matter may be determined by agreement, by negotiation. Then you do not want arbitration. The other thing that may happen is that instead of arbitration the question may be remitted to the Court to determine what amount of consideration is to be given to the transferor company.
All sorts of things arise on an endeavour to amalgamate in these circumstances—for instance, methods of calculating the valuation of a particular estate, and, of course, there may be all sorts of assets which are concerned here, stock in trade, machinery and subsidiary works, and so on. It may be necessary to deter-
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mine a question of law which may arise as to the meaning of some agreement or obligation imposed upon a particular transferor company. It may be necessary for the Court to determine what amount of stocks or shares, or for all I know debentures, ought to be payable to that company in respect of the particular asset which I have in mind. It may be that the better way of determining that would not be by arbitration but by one of the methods I have been considering. But if it is suggested that a valuer may be appointed who would be interested in the matter, or something of that sort, or who would be so concerned with the matter that he is not a proper arbitrator, it would not help anything to call him a valuer because there is a question to be determined which would make him an arbitrator. I do not think it is right to suggest that in such a case either the Board of Trade or the Houses of Parliament would be likely to consent to a scheme in which some wholly improper arbitrator was appointed to determine how much consideration should be given to one of the constituent companies. I do not think the noble Lord is really pledged to that. Accordingly I would submit, having regard to the explanation I have given as to the words "or otherwise," that my noble friend might think it wise not to press this Amendment.
LORD BALFOUR OF BURLEIGH: I am much obliged to the noble and learned Lord. What troubles me is that the powers of the Railway and Canal Commission to alter parts of a scheme are being very much curtailed. The matter will arise again on the next Amendment which stands in my name, and after what the noble and learned Lord Chancellor has said I will not press this Amendment but will raise the matter on my next Amendment.
Amendment, by leave, withdrawn.
LORD TEYNHAM LORD TEYNHAM moved to add to proviso (a) in the substituted subsection (2) in paragraph 2, "shall not confirm a scheme unless satisfied that it will result in lowering the cost of production or disposal of coal." The noble Lord said: I beg to move this Amendment on behalf of my noble friend Lord Gain-ford. The object is to reimpose one of the safeguards for the consideration of amalgamation schemes which are already

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contained in the Coal Mines Act, 1930. Before proceeding with a full explanation perhaps I might be permitted to remind your Lordships that the Government have agreed to add to Clause 43(2), which refers to the duty of the Coal Commission to reduce the number of coal mine undertakings, these words:
"and such report shall set forth the proposals of the Commission in regard to that area and the advantages which are expected to follow therefrom."
I should like to have the view of His Majesty's Government as to whether these words are intended to provide that the Railway and Canal Commission shall not confirm a scheme unless they are satisfied that it will result in lowering the cost of production or disposal of coal. If that is intended, I shall beg leave to withdraw.
Amendment moved—
Page 87, line 14, At end insert ("shall not confirm a scheme unless satisfied that it will result in lowering the cost of production or of disposal of coal").—(Lord Teynham.)
THE LORD CHANCELLOR: I cannot, I am afraid, give the noble Lord the assurance he requires, because I am unable to agree that no scheme shall be confirmed unless the body considering the matter has come to the conclusion as a matter of evidence that it is certain that it will result in lowering the cost of production or disposal of coal. The position is this. The question whether a scheme will so result is not capable of direct proof. It is a question of weighing all the circumstances—the future course which the coal trade may take, whether the export of coal can continue, the state of trade in the country, and a number of circumstances which I cannot at the moment enumerate but which the noble Viscount, Lord Samuel, if necessary, can tell my noble friend—in an endeavour to ascertain whether a particular scheme will result in lowering the cost of production or disposal of coal per se. It may so result.
What is to happen? In the first place, under Clause 42, the Commission have got to come to the conclusion that the number of separate undertakings to which the coal in any area is leased is so great as to be detrimental to the efficient working, treating or disposing thereof. Thereupon it may be their duty to effect a reduction in the number of such undertakings, if it can be done. Then there is to be a representation to the Board of Trade recommending that the powers
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of the Commission under the clause should become exercisable in any area. Then the matter comes in effect before Parliament in the form of a Provisional Order which is to be the subject of debate in special Committees. Those Committees have got to be satisfied as a matter of reason that there is a probability that as a result of the undertakings being combined they will be carried on more economically and efficiently, so far as human beings can tell, owing to the fact that there has been the amalgamation. That will be a thing that everybody can talk about in Committee, and a thing on which the Committees will have to be satisfied. The matter has to go before the Board, and Parliament may make a Provisional Order declaring—that is what I want to say—that it is expedient in the national interest that the number of coalmining undertakings should be reduced in the area with respect to which the recommendation is made. That Provisional Order will not be made unless Parliament is satisfied that there is good reason for it. It will not be made unless probabilities are satisfied in that matter.
That does not mean that Parliament will have definite positive evidence to show that there must be a reduction in the cost of production of coal or in its marketability. Accordingly the words proposed are not possible to accept. That is the stage at which things are a matter of policy, and that is not a matter with which, under the Bill as it stands, the Railway and Canal Commission will be charged. The question of policy has already been determined when the matter has resulted in the Provisional Order becoming part of the law of the land, and then the questions of law, and questions which can be determined by strict evidence, will finally come before the Railway and Canal Commission. But as the Amendment stands it requires the Railway and Canal Commission to be satisfied that the scheme will result in lowering the cost of production or disposal of coal—a thing that is not intended to be submitted to the Railway and Canal Commission at any stage in their duties, a matter which is one of policy and probability and which is to be determined on the Provisional Order. These words cannot possibly be accepted.
LORD TEYNHAM: I have very fully considered the views put forward by the noble and learned Lord, but I should

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like to remind your Lordships that when the 1930 Act was before this House, an Amendment was carried which prevented the Railway and Canal Commission from confirming a scheme of amalgamation unless they were satisfied that it would lower the cost of production and disposal of coal. I hardly think that your Lordships would wish to exclude from this Bill this very necessary provision which your Lordships have already inserted in the 1930 Act.
EARL STANHOPE: The point is that, since the 1930 Act, Parliament has been brought into the matter to consider the whole of that aspect of the question. In the 1930 Act the whole thing was left to the Railway and Canal Commission. Now Parliament is brought in. The Board of Trade have to make a report to Parliament, and both this House and another place have to consider the matter from its broader political aspects; only the technical aspects are now left to the Railway and Canal Commission. It is a different procedure from what was enacted in 1930.
LORD TEYNHAM: In view of the assurance which has been given by the noble and learned Lord and the noble Earl that the matter of the lowering of the cost of production of coal will also be considered when the matter comes before a Committee of Parliament, I beg leave to withdraw.
Amendment, by leave, withdrawn.
LORD BALFOUR OF BURLEIGH LORD BALFOUR OF BURLEIGH moved, in paragraph (b) of the substituted subsection (2) in paragraph 2, to leave out "inconsistent with any provisions required by the enactments relating thereto to be included in schemes submitted to the Board of Trade by the Coal Commission" and insert "on the ground that the reduction of undertakings as provided for in Clause 43, subsection (1) of this Act is desirable or otherwise." The noble Lord said: On behalf of the noble Marquess, Lord Lothian, I beg to move the Amendment which stands in his name. This paragraph has to do with the powers of the Railway and Canal Commission, and I am very much concerned at what appears to be the effect of proviso (b). It appears to limit those powers to a degree much greater than has, I think, been generally realised. There appears
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to be a general impression that, apart from the fact that the Railway and Canal Commission are no longer to judge whether a scheme is in the national interest, their powers and duties are not affected. But if my reading of this very complicated paragraph is right, they are affected to a very great extent. This proviso (b) provides that the Railway and Canal Commission
"shall not have power to make, or require to be made, in the scheme modifications inconsistent with any provisions required by the enactments relating thereto to be included in schemes submitted to the Board of Trade by the Coal Commission"—
and so on. If I understand it aright, the effect of those words is that a modification in the scheme would be inconsistent, and therefore prohibited, if the scheme after the proposed modification would contradict provisions dealing with reserved matters.
I do not know if the noble and learned Lord Chancellor follows what I mean, but what I understand is that all these matters referred to on pages 85 and 86 of the Bill under the heading:
"The following provisions shall have effect with respect to any scheme submitted to the Board of Trade by the Coal Commission,"
are excluded from the purview of the Railway and Canal Commission. Then we have:

"(a) the scheme shall provide for the consideration to tie given to each of the constituent companies … out of the securities….

(b) the scheme shall determine the classes of securities"

and so on. I read this proviso (b) on page 87 as excluding all these matters from the purview of the Railway and Canal Commission.
Amendment moved—
Page 87, line 16, leave out from ("modifications") to ("but") in line 20 and insert ("on the ground that the reduction of undertakings as provided for in Clause 43, subsection (1) of this Act is desirable or otherwise.")—(Lord Balfour of Burleigh.)
THE LORD CHANCELLOR: If the noble Lord will allow me, I can assure him that, although I know that view has been entertained in a certain quarter, it is not right. If the noble Lord will look at page 87, line 15, the beginning of proviso (b), and just follow me, I think I can make it clear that the fear which others have entertained is incorrect:

781
"shall not have, power to make, or require to be made, in the scheme modifications inconsistent with any provisions required by the enactments relating thereto to be included in schemes submitted to the Board of Trade."
That is to say, that where there is a provision required by the enactments—and I emphasize the words "by the enactments"—the Railway and Canal Commission have to bear those in mind and cannot go beyond them. But the reserved matters which the noble Lord has mentioned are matters not "required by the enactments relating thereto," but matters which ate provisions of the scheme. The very object of the power to modify may be to modify the provisions of the scheme that are before them. For instance, it would be inconsistent with the provisions of the enactments if the Court were to award consideration to a constituent company otherwise than in the form of securities in the company to which this property is to be transferred, because that is one of the enactments, or if they assessed the consideration otherwise than on the basis of the value of the property ascertained as between a willing vendor and a willing purchaser, or again if they omitted from the scheme a provision for the final determination of the consideration by arbitration or otherwise. Those are the things in the enactments, but the other things which it is feared would not be permitted are not in any way touched by this proviso.
LORD BALFOUR OF BURLEIGH: May I ask if in a word it is merely the national aspect of the matter which is withdrawn from the Railway and Canal Commission, and other things remain within the purview of the Commission?
THE LORD CHANCELLOR: It is not only the national interest but the basic agreement by which constituent companies are to be bound as between themselves and the transferee company. They have in the Bill as provided, and in the Act of 1930, certain safeguards for their protection, and the safeguards and the actual provisions required by the enactments relating to the scheme are immutable and are not to be affected by anything that the Railway and Canal Commission may do.
LORD BALFOUR OF BURLEIGH: I am very grateful for the patience with which the noble and learned Lord has
782
tried to explain this complicated matter. I expect the explanation given will carry comfort to those high legal minds which have expressed doubt. If not, if I withdraw my Amendment now, perhaps he will allow me to return to it on the Report stage.
Amendment, by leave, withdrawn.
Seventh Schedule agreed to.
Eighth Schedule:

EIGHTH SCHEDULE.

  AMENDMENTS OF 20 & 21 GEO. 5. c. 34, ss. 5 AND 8.
  1. In subsection (2) of Section five, after the words "Board of Trade" there shall be inserted the words following—"the person to be appointed as chairman shall be a member of the legal profession,".
  2. For subsection (3) of Section five there shall be substituted" the following subsections:—
  (3C) The chairman shall be present at every meeting of a committee of investigation. Any such committee may take evidence on oath, and for that purpose the chairman shall have power to administer an oath. Any evidence taken by a committee shall, except in so far as it relates to any particular business or under-taking or unless the committee for any special reason otherwise decide, be taken in public, and the decision of the committee upon every complaint shall be delivered in public. Subject to the foregoing provisions of this subsection, the meetings and procedure of every committee of investigation shall be regulated in accordance with rules made by the Board of Trade for the purpose."
  LORD BALFOUR OF BURLEIGH LORD BALFOUR OF BURLEIGH moved, at the beginning, to insert:
  "1. After subsection (1) of Section five there shall be inserted the following new subsection:
  '(1A) If it appears to the Board of Trade to be expedient that more than one district committee of investigation should be constituted for any district with a view to the investigation of complaints relating to different matters or to different localities by different committees, two or more such committees may be constituted therefor and shall be charged respectively with the duty of investigating any complaint with respect to the operation of the district scheme for that district made in relation to such matters or to such localities as the Board may direct.'"
  The noble Lord said: I need not take up much time in moving this Amendment, because I understand that the Government are prepared to accept it. It provides for the further protection of consumers. The districts are to be very large, and the Bill only provides for one

  783
  committee of investigation in one district. This Amendment gives a discretion to the Board of Trade to appoint additional committees of investigation in cases where they think it is desirable.
  Amendment moved—
  Page 88, line 4, at the beginning, insert the said words.—(Lord Balfour of Burleigh.)
  On Question, Amendment agreed to.
  VISCOUNT HORNE OF SLAMANNAN VISCOUNT HORNE OF SLAMANNAN moved, in the substituted subsection (3C) in paragraph 2, after "investigation" at the end of the first sentence, to insert "and any question at such meeting shall if the votes of all the members present and voting thereon are not unanimous be determined by the chairman." The noble Viscount said: The object of this Amendment is to bring the Government back to their original ideas upon the subject of committees of investigation. I indeed hope they will do something to recapture in this matter their first fine careless rapture. If your Lordships will remember, committees of investigation are set up, before which consumers are allowed to appear and state their complaints. You have both a National Committee of Investigation, and district committees of investigation. With regard to district committees of investigation, with which alone my Amendment is concerned, they are composed of five persons—namely, a chairman, two people representative of the consumers, and two others representative of the coal interest. One of the last represents the colliery proprietors and the other the coal miners. The Government originally, in making this provision, altered the composition of the committee under the previous Statute to provide that there should be a compulsory chairman, and that he should be a person expert in the law. The rest of the committee remained as it was.
  In this sub-paragraph it is provided that the chairman should be present at every meeting of the committee of investigation, and then I propose to re-insert what the Government, under some duress in another place, left out from the Bill as presented to this House, namely:
  "and any question at such meeting shall, if the votes of all the members present and voting therein are not unanimious, be determined by the chairman."
  I think in the interests of everybody it would be wise to regard the representatives of the conflicting interests as really
  784
  assessors in these committees, and that the ultimate decision should be taken by the chairman alone. It is quite conceivable that you have clashes of interest taking place which may bring about a quite untoward result.
  Indeed in another place Captain Osbert Peake gave illustrations of what happened before such a committee. The representatives of the coal interest always stood with a well-established and formidable front, whereas you found a difference of opinion always continuing between the representatives of the consumers. One of those representatives was appointed by the large consuming interest, and the other by the small consuming interest, and the rivalry between these two elements on the committee very often resulted in one or other going over to the coal side. I think in circumstances of that kind it would be much more proper, and lead to much better conclusions, if these people were to be regarded simply as advisers or assessors of the committee, and that the ultimate decision should rest with the entirely independent legal expert, the chairman. I beg to move.
  Amendment moved—
  Page 88, line 39, after ("investigation"), insert the said words.—(Viscount Horne of Slamannan.)
  THE EARL OF MUNSTER: It is perfectly true, as the noble Viscount has said, that this Bill when originally introduced did provide that if the members of these committees were not unanimous the vote of the independent chairman should prevail. Where there was no appeal from the committee's decision there was a good deal to be said for giving the independent chairman a deciding vote, but where, as the Bill stands at the present moment, there is being set up an Appeal Tribunal to which all these cases can be taken from these committees of investigation, anybody who is aggrieved by the decision of one of these committees may appeal, and we think the existence of this tribunal does away with the necessity of giving to the chairman of the committee dictatorial powers. I think, if I may be so brave as to offer a few words of advice to my noble friend, he would be well advised to leave the Bill as it stands and as it came to us amended by the Government in another place.
  VISCOUNT HORNE OF SLAMANNAN: If the Government disdain their own original wisdom it is not for me to force it upon them. I beg leave to withdraw.
  Amendment, by leave, withdrawn.
  LORD MIDDLETON LORD MIDDLETON moved to insert after paragraph 2:
  "3. At the end of subsection (5) of the said Section five the following words shall be added:
  "and the complainant also shall furnish the committee with such returns, accounts and other information as the committee considers relevant to the investigation"
  The noble Lord said: This Amendment is not one of major importance, but it is considered that it will improve the Bill, and I understand that the Government accept that view. I beg to move.
  Amendment moved—
  Page 89, line 6, at end insert the said new paragraph.—(Lord Middleton.)
  EARL STANHOPE: I accept the Amendment.
  On Question, Amendment agreed to.
  VISCOUNT ELIBANK VISCOUNT ELIBANK moved, after paragraph 7, to insert the following new paragraph:
  "8. In Section six of the said Act, at the end of the section, there shall be inserted the words 'The Board of Trade may require the executive board of any district to keep an accurate list of the permit prices current for the time being in their district, and to allow any consumer who satisfies the executive board that he has a bona-fide interest in the matter to inspect such list at all reasonable hours.'"
  The noble Viscount said: I am moving this Amendment on behalf of the consumers. The consumers really have been rather a Cinderella during the past few days and nights, and the royalty owners and colliery owners have perhaps been uppermost in the thoughts of your Lordships. This Amendment is really put forward on behalf of a very large body of consumers, the National Union of Manufacturers, and other consumers who think like them. An Amendment moved by the noble Lord, Lord Balfour of Burleigh, has certainly eased the position in which those consumers will be placed by securing additional investigating committees. But that does not go so far as this Amendment. Under the selling schemes which will be set up it will be necessary for consumers to apply for a price for the particular coal which they require. They will
  786
  then be given that price, but they will not have available at the same time the prices of other types of coal that may be competing with it. If they desire to obtain those other prices, under the Bill as it stands they have to go to an investigating committee to obtain that information, if they can, and that means time and expense.
  This Amendment merely asks that the various collieries shall send to the executive boards lists of prices of the different coals they supply, and that these lists should be brought up to date from time to time, and be available for consumers who wish to purchase coal through the central selling scheme. The collieries may say that that means more clerical labour, but to-day they have to provide for the manufacturers the prices of all the different types of coal which they are able to supply, and I do not see why, when this Bill is passed, they should not be in the same position. The manufacturers will be under great disabilities if this Amendment is not agreed to. I am aware that there is a good deal of opposition to it on behalf of the colliery owners and others, but I hope that the Government on this occasion will side with the consumers, instead of the colliery owners, as they have done so often in these debates.
  Amendment moved—
  Page 90, line 44, at end insert the said new paragraph.—(Viscount Elibank.)
  VISCOUNT HORNE OF SLAMANNAN: I would venture to support my noble friend. The consumer undoubtedly is placed under great disabilities under this measure, and the setting up of district committees and a Central Committee for the selling of coal imposes upon a consumer the obligation of disclosing why it is, for example, that he wishes to change his supply of coal. He is not allowed to make a complaint if his sole reason for changing the supply is because of the price. That puts him in great difficulty, because very often he wants to get a cheaper coal which is of a different grade. His object is not to get a cheaper price for a coal of the same grade, but to get something cheaper for his purpose in a different grade. It is obvious, therefore, that it is highly important for him to have a list of those prices in the various grades, and I think it would not impose a very severe burden on the colliery proprietors if they were to have a list of those prices

  787
  in the various grades to which the ordinary consumer could have access. I do not say it is a matter of immense importance, but it is a point which the colliery proprietors might concede, and which the Government in the interests of the consumers at large might support.
  THE EARL OF DUDLEY: It is on very rare occasions that I find myself in disagreement with my noble friend, but I hope the Government will resist this Amendment. It would be impracticable, and indeed impossible, for an executive board to keep an accurate list of permit prices current in the district, for the simple reason that there are no such things as fixed permit prices for various classes of coal in any district. These permit prices are settled in individual inquiries having regard to all the circumstances affecting the particular contract, such as the amount of tonnage involved, the period of the proposed contract, the state of the market at that particular time, and the relative state of demand for the various classes and sizes of coal. It would really be quite impossible to keep from time to time permit prices in respect of all these various classes of coal, just like the catalogue of a store.
  VISCOUNT ELIBANK: Will the noble Earl say what the exact practice is now, because prices have to be supplied by collieries all the time?
  THE EARL OF DUDLEY: That is what I have already attempted to do. Each permit price is settled in each case in individual inquiries and in regard to the particular contract, and all the factors that enter into it. Apart from that objection, there are over a large part of the industry central selling schemes which have been set up under previous Acts, and in such cases there are no such things as permit prices, for the body administering the scheme is itself the seller of the coal. Indeed, as matters stand at present, the committees of investigation have power to call upon the body administering the scheme for such information as to prices as they may require in order to enable them to deal with complaints.
  THE EARL OF MUNSTER: I am informed that the proposed Amendment of my noble friend makes a general departture from the principle which has been followed with regard to the 1930 Act schemes since that Act was passed.
  788
  Amendments of the schemes and the duties of the boards under the schemes are not imposed upon the industry except by consent, and apparently, from what my noble friend Lord Dudley has said, there is no consent on the part of the coal industry to this Amendment. Further, it would be impossible to comply with the request of the noble Viscount which is contained in his Amendment. He asks that a list of prices should be brought up to date from time to time, but prices vary frequently, and constant and frequent alterations would be necessary in any such proposal. The Amendment is quite unacceptable to the Government, and it is not acceptable in any way to the Mining Association either.
  VISCOUNT ELIBANK: I do not propose to press this Amendment, but I did hope it would have been possible to make this position a little more elastic than it will be when the Bill becomes law. At the present moment there are very few selling schemes in force in the country, but when the country becomes permeated with selling schemes I can see the consumer, in the respects of which the noble Viscount, Lord Horne, and I have spoken, in a difficult position very often. It is not a question of complaint, as the noble Earl, Lord Dudley, has said. It is a question of the ordinary flow of business to enable a man to compete with the manufacturer alongside him and the manufacturer overseas. I beg leave to withdraw.
  Amendment, by leave, withdrawn.
  Eighth Schedule, as amended, agreed to.
  Clause 12, the further consideration of which had been postponed till after the consideration of the Schedules:
  Right of freeholder in possession of coal to lease thereof.
  12.—(1) A person carrying on the business of coal-mining immediately before the vesting date, who is then beneficially entitled (whether or not subject to a mortgage) to the entire fee simple in coal or a mine of coal that is not subject at that date to any coalmining lease, shall have the right, if he has made an application in writing in that behalf to the Commission before the vesting date, to a grant from the Commission of a coalmining lease comprising any coal or mine of coal specified in his application to which he is so entitled and any property and rights that vest in the Commission therewith:
  Provided that a person shall not be entitled under this section to a lease the grant of which would interfere with the exercise of

  789
  a right granted by a working facilities order, or with the use or exercise under a coalmining lease of any poperty or right comprised therein.
  (2) A lease granted, under this section shall be granted for such a term, commencing on the vesting date, as the person entitled to the lease may require, not being longer as regards the coal comprised therein than may be reasonably requisite for enabling that coal to be worked out, and subject to conditions with respect to rent and otherwise not more onerous to the lessee than the conditions customary in the district or, where there are no customary conditions or the customary conditions are not applicable, than the conditions to which a person not entitled to the benefit of this section might reasonably have been expected to agree, and the Commission may grant a lease to the person entitled on conditions less onerous than the conditions aforesaid where it appears to them that the situation of that person in respect of the business of coal-mining carried on by him would otherwise lie unduly unfavourable as compared with his situation in that respect as owner of the fee simple in the premises.
  VISCOUNT HORNE OF SLAMANNAN VISCOUNT HORNE OF SLAMANNAN moved, in subsection (1), after "entitled," to insert "and was so entitled before the tenth day of November nineteen hundred and thirty-seven." The noble Viscount said: The Amendments which have been put upon the Paper were put forward in more or less general terms in the speech I previously made in Committee. As your Lordships know, Clause 12 was postponed for consideration until the end of the Schedules on the indication that the Government recognised that a considerable injustice was being perpetrated on what are known as the freehold owners of coal if the Bill was carried through in the shape in which it then stood. Since then conversations have taken place between the noble Earl who leads the House and several of those concerned in moving the Amendments, including myself, with the result, as I understand it, that the Government and those who proposed the Amendments are really more or less at one in the general principle which ought to be carried out.
  The Government have suggested in the clause they have put forward certain terms in which they would be prepared to amend Clause 12, and these terms are now before the Committee in the subsequent Amendments to be moved by my noble friend the Leader of the House. At this moment I am not prepared entirely to accept the phraseology adopted by the Government as being the best form of
  790
  words in which the views both of the Government and of those who moved the Amendments can be expressed, but in principle undoubtedly they meet the point which we had urged. Accordingly, if my noble friend Lord Stanhope is willing to allow us to move on the Report stage any Amendments that we choose to the form of words which he has adopted in his Amendment, I will be willing to withdraw the Amendments which stand in my name, amongst others, on the Paper.
  Amendment moved—
  Page 14, line 18, after ("entitled") insert ("and was so entitled before the tenth day of November nineteen hundred and thirty seven").—(Viscount Horne of Slamannan.)
  EARL STANHOPE: I entirely accept what my noble friend said. I think we are agreed in regard to the principle of the matter, and it is merely a question of finding words. We hoped on both sides we had found suitable words, but my noble friend says he is not quite sure that they go far enough. I am not quite sure that they do not go a shade too far, and therefore both of us will be free, on the further stages of the Bill, to make such Amendments as we consider necessary and desirable. The noble Viscount is quite correct in saying we are all agreed as to what we wish to arrive at, and it is merely a question of words to carry out that principle. So far as I am concerned, I am quite prepared to move the Amendments standing in my name on the full understanding that I or the noble Viscount will have full liberty to amend the wording later on, if necessary.
  LORD STRABOLGI: If I may be so bold, I should like to ask for a little more information about this arrangement which apparently has been made between the noble Viscount, Lord Horne, and his friends and the Government. Do I understand that all these Amendments are more or less agreed for the time being—all the remaining Amendments on the Paper?
  EARL STANHOPE: Only those in my name.
  LORD STRABOLGI: Do I understand the Government are accepting the two Amendments in the name of the noble Viscount, Lord Horne?
  EARL STANHOPE: No.
  LORD STRABOLGI: These are not being accepted, but the two standing in the name of the Leader of the House are, I understand, for the time being acceptable to the noble Viscount and his friends. I am very glad to see this harmony amongst the Government supporters restored. It has saved us perhaps another late sitting, but I hope, when the noble Earl moves his Amendments, we can have just a word of explanation, particularly as to the effect on the financial provisions of the Bill.
  VISCOUNT HORNE OF SLAMANNAN: I beg leave to withdraw my Amendment.
  Amendment, by leave, withdrawn.
  EARL STANHOPE EARL STANHOPE had given Notice of two Amendments to subsection (2)—namely, to leave out "not" ["not more onerous"] and insert "which shall not in any case be" and to leave out all words from, and including "Commission" in order to insert:
  "conditions of the lease shall, where the person entitled thereto acquired the fee simple in the coal before the tenth day of November nineteen hundred and thirty-seven, be so framed as to secure that his financial position in respect of his business of working the coal shall not be adversely affected by the operation of this Part of this Act."
  The noble Earl said: I do not know if your Lordships would like me to take both Amendments together. They deal with the same subject. Briefly they leave the situation in regard to freehold coal exactly as it was before this Bill came into operation. It will be left in the same financial position in regard to the amount the owners pay in the matter of rent, taking into consideration the amount they have paid for the coal in the first instance. As regards the finance of the Bill, the Amendments will have no effect whatever. The freehold coal will be valued with other coal and in exactly the same way. Then the amount that will be paid in rent will come in on the other side, and it will not affect the finance of the Bill one way or the other. The whole valuation will come into the £66,450,000, and therefore the finance of the scheme is not affected.
  Amendment moved—
  Page 14, line 39, leave out ("not") and insert ("which shall not in any case be").—(Earl Stanhope.)
  LORD STRABOLGI: I only want to say I feel a very heavy responsibility in
  792
  this matter. As your Lordships know, my noble friends and I make no pretence of speaking for any one on this question other than the Miners' Federation who are members of our Party and are, after all, those most nearly affected. In all the Amendments we have moved and all the discussions in which we have engaged we have been acting openly and, I hope, honestly on behalf of this great organisation. We have been trying to speak for the 700,000 or 800,000 workers in the coal industry. I am not in a position to say what their views are on this particular Amendment. I recognise that it is an important one. I know it meets a genuinely felt grievance, and I am not going to say it is not in the national interest, but I am afraid it will have to remain where I leave it, as far as we are concerned, until there has been time to consider it.
  EARL STANHOPE: So far as I can see it will not affect any miner at all, certainly not adversely.
  LORD CROMWELL: I do not propose to oppose the Amendments to this clause which appear on the Paper in the name of my noble friend the Leader of the House, but I am afraid I am unable to give silent assent to them, and as briefly as possible wish to make my position clear. Throughout the debates it has been agreed from all quarters of the House that an owner of coal has an undisputed right to the same, both legally and morally, and therefore it cannot be claimed that any particular section had more right than any other. It is true to say that this clause, as amended, will not draw any distinction in so far as the compensation goes, but no one can deny that it implies that one section of the royalty owners is not getting a fair deal, and obviously, if this is true, then it is equally true of all of them.
  It has been argued that colliery companies owning coal should be treated differently to private individuals also owning coal because, in fact, the former have risked their capital and the latter have not. The fallacy of this is obvious, and, if I may say so without offence, even the Government see through it, but at the same time they are anxious to placate an influential body of people providing they do no actual material injury to the despised and unimportant private royalty owners. It is true that no actual damage

  793
  is being done to the royalty owners but the Government certainly cannot escape from their dilemma, and I challenge them to deny that Clause 12, as amended, is an admission that the £66,000,000 for which they propose to acquire all the coal in the country is a totally inadequate figure.
  VISCOUNT SAMUEL: I do not rise to challenge the principle of this Amendment, but only to ask the noble Leader of the House if he could give a little further elucidation in regard to the financial aspect. The coal in question is about one-eighth of the whole of the coal in the country; therefore, presumably, about one-eighth of the value of the whole of the coal in the country. The owners of this coal, the freehold owners who are also working the coal, will now not pay anything under this Bill and will not receive anything, so I gather, and when the valuation is made they will have no special interest to secure that their value is as high a one as the circumstances of the case require. My point is whether under this new arrangement the noble Earl, the Leader of the House, is sure that the valuation will really be adequate and will represent the sum which this coal is really worth, because if not, then the other royalty owners will be receiving something up to one-eighth more than they would otherwise receive. I have no doubt that would be very welcome to them.
  LORD HASTINGS: And deserved.
  VISCOUNT SAMUEL: I should like to know whether that is so, because if it is we ought to know just what we are doing. It may be said that this does not matter to anybody, because it will all come out of the £66,000,000 and the State will not be required to find any more money, but if there is some ultimate residue conceivable for general purposes, or if it is desired to use this money in some way beneficial to the industry, the position will have been altered. I do not want to go into that; I only want to know whether in any respect the finances of the Bill as regards the valuation of this great property and the use of the proceeds are in any way affected by the Amendment which we are now asked to accept.
  THE EARL OF LINDSAY: I should like to say, speaking as one interested in the question of freehold coal, that I do not think it is wise to look a gift horse in
  794
  the mouth. I think those colliery companies possessing freehold coal should be grateful to the noble Earl and the Government for the clause he proposes to insert. It must be borne in mind that in many cases colliery companies have paid more than fifteen years' purchase for their coal, so that there should be no complaints about what they are getting. Moreover, the fact remains that they may have paid for the coal several years back and at the same time have stood out of the interest on the money so expended. I mention these facts to show that the owners of freehold coal are not getting any special privilege at the expense of other royalty owners.
  VISCOUNT SAMUEL: The noble Earl has misunderstood me. I was not suggesting they were.
  LORD HASTINGS: But what the noble Viscount suggested was that other royalty owners were going to get money at the expense of the general fund. I have a vivid recollection of about three days ago supporting the noble Viscount on a financial point, and now that I have that in front of me I say: "Never again; never again!" The noble Viscount may be absolutely certain that whoever gets anything out of this it will not be the royalty owners, but we shall not forget that the noble Viscount did try to prevent it.
  EARL STANHOPE: I do not know if the noble Viscount, Lord Samuel, was here during the earlier part of the proceedings. If he had been he would—
  VISCOUNT SAMUEL: I have been here throughout the proceedings.
  EARL STANHOPE: I am sorry, but I must not have made myself clear in moving some Amendments to the Third Schedule which dealt with this particular point.
  VISCOUNT SAMUEL: I was out for about ten minutes.
  EARL STANHOPE: I think I can state their effect very shortly. The point was this, that we recognised that there was really nothing which would cause the freehold owner of coal to see that a proper valuation of coal was put in and, therefore, we thought it necessary to insert Amendments to safeguard that position and see that full particulars were for-

  795
  warded, so that the valuation should be put on a proper basis. If the Coal Commission thought that that was not being done then, under the first Amendment, they would have a right to appear before the Regional Committee and make their case that the valuation should be reconsidered. The second Amendment dealt with the matter before a referee. There again the Coal Commission have a right to intervene in all these cases of freehold coal. Thus a provision was inserted to safeguard the position and to see that the valuation was done on proper lines and that the freehold owners did not get away with a very small value of coal so that other coalowners should get more than they were entitled to.
  VISCOUNT SAMUEL: I am very grateful to the noble Earl for the explanation.
  On Question, Amendment agreed to.
  EARL STANHOPE: I beg to move the Amendment in my name at page 15, line 2.
  Amendment moved—
  Page 15, line 2, leave out from ("the") to the end of the subsection and insert ("conditions of the lease shall, where the person entitled thereto acquired the fee simple in the coal before the tenth day of November nineteen hundred and thirty-seven, be so framed as to secure that his financial position in respect of his business of working the coal shall not be adversely affected by the operation of this Part of this Act.")—(Earl Stanhope.)
  On Question, Amendment agreed to.
  Clause 12, as amended, agreed to.
  House resumed.

BUSINESS OF THE HOUSE.
LORD BALFOUR OF BURLEIGH: Before the House adjourns will it be proper to ask the noble Earl if he could give us some indication when we might expect to take the Report stage of the Coal Bill?
EARL STANHOPE: We are proposing to put it down, if it suits your Lordships, for Tuesday and Wednesday, June 21 and 22.
House adjourned at eight o'clock.